Portugal has been a lucrative destination for exporters from India with the figures touching $906 million during Apr – Dec 2021. There is a lot of potential in the upcoming sectors that still have a gap between demand and supply in the country. However, there are some challenges that Portugal importers face that can be easily addressed by the Indian exporters.
In an effort to create awareness and provide solutions, ICICI Bank recently hosted a session on Export Opportunities in Portugal as part of its Business Connect webinar series. It was led by Preetham Shivamurthy, Head of Economic and Commercial Wing, Embassy of India in Lisbon, Portugal and Altino Alvarez, Executive President, Portugal India Business Hub.
It was an important session, especially for any new or experienced exporter planning to expand their business in Portugal. Several important points were covered in the session, including factors that make Portugal a profitable destination for India, the presence of a strong Indian diaspora, significance and advantages of the ongoing Industrial Free Trade Zone, tariff & non-tariff barriers, diversifying supply chains etc. Notably, the Special Economic Zones (SEZ) Act is to be replaced with a new legislation to enable States to become partners in the Development of Enterprise and Service Hubs to optimally utilise the available infrastructure and enhance competitiveness of exports.
Setting up a company in Portugal
To open a company in Portugal, some fast-track programmes exist that is traditionally a 6-step procedure that takes around 15 days.
It includes the following steps:
1) Obtain a Certificate of Admissibility to formally identify your Portuguese company name. This can be done through the Institute of Registries and Notary (IRN)
2) Apply for a Company and a Collective Card (the main business ID) from the IRN
3) Open a Business Bank Account and deposit the initial capital
4) Declare commencement of activity at the local Tax Office
5) Register your Portuguese business at a Commercial Registry Office
6) Register as an employer at the local Social Security office.
In a video aired during the webinar, Manoj Monga, Managing Director of a leading medical diagnostics company shared his experience of transacting through the ICICI Bank platform. ICICI Bank’s Trade Emerge platform is a market-first solution that addresses cross-border trade needs of Indian exporters and importers.
So far, Monga explained, the entire process involved a cumbersome paper trail of filing details for every shipment, submitting it to the bank, losing out on favourable exchange rates due to the time taken, etc. However, during the Covid-19 pandemic, when it was a challenge to physically visit the Bank, ICICI Bank’s online trade portal for import-export transactions offered an easy way out. Remarks Monga, “Literally, I can do it sitting at home, sipping coffee or anywhere in the world on my mobile or on my laptop. One of my favourite features is that it gives me a complete overview of my past transactions and pending import contracts. This new platform has made our business very smooth and efficient.”
Important sectors for export
These six commodity groups make up nearly 90 percent of the total export to Portugal: engineering goods (309.75 mn); cotton yarn/fabrics/made-ups, handloom products, etc (205.29 mn); leather and leather manufactures (42.25 mn); plastic and linoleum (64.52 mn); organic & inorganic chemicals (79.6 mn) and marine products (43.82 mn), totalling to $906 million in Apr-Dec 2021.
Cotton yarns, Textiles, Apparel and Footwear: These account for more than one-third of the bilateral trade with Portugal. Imports of synthetic yarns into Portugal rely heavily on Chinese exporters and more diversification would be appreciated.
Leather: Footwear components, especially high-quality shoe-uppers are in high demand alongside accessories such as belts and wallets.
Pharmaceuticals: There is scope for sourcing medical and surgical instruments from India after the pandemic. Opportunities to boost the export of ready-made pharmaceutical products to Portugal are significant, as it imports around 80 percent of its cheap medicine such as painkillers mostly from China.
Food Products: As a major producer of rice, maize, wheat and cereals, India could consider exporting these products to Portugal, whether for animal feed or human consumption.
Fruits and Vegetables: There is a huge opportunity to export Indian mangoes (e.g. Alphonso variety). Alphonso mangoes are harvested between April and June, which coincides with a ‘gap’ in the Portuguese market, currently supplied by Brazilian and Spanish mangoes. Resolution of inadequate refrigeration capacity of the Portuguese customs services can increase the scope to export more varieties of fruits and vegetables.
Wellness products: With tourism being a mainstay of the Portuguese economy (accounting for 16.5% of GDP in 2019), wellness tourism can be promoted in collaboration with local players. Ayurvedic massages and therapies are already being offered by over 300 practitioners and in about half a dozen hotels/resorts in Portugal.
Other thriving sectors include marine products (e.g. cuttlefish, prawns), engineering goods (including steel) and chemicals.
The session was productive in creating awareness around Portugal and the diverse landscape it offers for Indian exporters with a potential to touch greater heights.