Context:

PM congratulates H. E Petr Fiala on appointment as PM of Czech Republic

About Czech Republic:

• It is a landlocked country in Central Europe. It is bordered by Austria to the south, Germany to the west, Poland to the northeast, and Slovakia to the east.
• Capital Prague
• It has a hilly landscape with a mostly temperate continental climate and oceanic climate. It is a unitary parliamentary republic.
• It is a developed country with an advanced, high income social market economy. It is a welfare state with a European social model, universal health care and tuition-free university education.
• The Czech Republic is a member of NATO, the EU, OECD, Organization for Security and Co-operation in Europe (OSCE) and the Council of Europe (CoE).

Historical Background

Following the First World War, the closely related Czechs and Slovaks of the former Austro- Hungarian Empire merged to form Czechoslovakia. After World War II, a truncated Czechoslovakia fell within the Soviet sphere of influence. With the collapse of Soviet authority in 1989, Czechoslovakia regained its freedom through a peaceful “Velvet Revolution.” On 1 January 1993, the country underwent a “velvet divorce” into its two national components, the Czech Republic and Slovakia. The Czech Republic joined NATO in 1999 and the European Union in 2004.

Tension between Russia and Czech Republic

• Prague had accused Russian embassy officials of being intelligence operatives.
• It said that it suspected Russia of being involved in a 2014 explosion at an arms depot that left two dead.
• In June 2020, Russia was accused of being behind a poisoning scare targeting Czech politicians, including the mayor of Prague.
• Russia offered scathing criticism of the Czech Republic’s decision by saying that Prague wants to fulfill its desire to please US against the background of recent US sanctions against Russia.

Czech Republic–India relations

Economic relations between India and Czech Republic date back to the Middle Ages. People in both countries have always been interested in learning more about the history, language and culture of the other country. During the years after India’s independence, Czechoslovakia also played a role as a vital economic partner. Today, both India and Czech Republic have established close relations when it comes to trade, investment and tourism.

• India has possessed trade relations with Czechoslovakia since before India’s independence. Even in the 1930s, Bata had more than a 100 Czechoslovak employees in Calcutta, India.
• During the years after India’s independence, Czechoslovakia set up a great number of major projects in India in fields such as energy, defence and metallurgy. However, after the creation of the Czech Republic on January 1, 1993, trade declined due to the liquidation of some major state-owned corporations in the Czech Republic and the switch to payments being made in freely convertible currencies.
• Diplomatic relations between the two countries were first formally established on November 18, 1947, after which many former Indian presidents and prime ministers paid frequent visits to Czechoslovakia.
• In February 1994, former Czech President Václav Havel visited India, where he received two prestigious awards: the Indira Gandhi Peace Prize and the Mahatma Gandhi Peace Prize.
• In October 1998, the two countries signed a Double Taxation Avoidance Agreement In June 2010, the Vice President of India, Mohammad Hamid Ansari, visited the Czech Republic and a Social Security Agreement as well as an Agreement on Economic Cooperation between the two countries were signed.

• The following is a list of some of the important agreements signed between India and Czech Republic:
  • 1966: Agreement on the use of nuclear energy for peaceful purposes
  • 1973: Agreement on scientific, technical and industrial cooperation
  • 1978: Agreement on cooperation in sea transportation
  • 1993: Trade Agreement between the Government of the Czech Republic and the Government of the Republic of India
  • 1998: Bilateral Investment Promotion and Protection Agreement (BIPPA)
  • 1999: Double Taxation Avoidance Agreement (DTAA)
  • 2003: Agreement on Defence Cooperation between the Government of the Czech Republic and the Government of the Republic of India
  • 2010: Agreement on Economic Cooperation between the Government of the Czech Republic and the Government of the Republic of India

Both India and Czech Republic are equally interested in being educated about the history and culture of the other country. Czech people are passionate about yoga, Ayurveda and Indian religious texts. Many universities in the Czech Republic have a long history of offering education about Indian culture, languages, literature and history. Similarly, in the Delhi University in India, students can learn Czech language and history, and are increasingly eager to visit Czech Republic to explore the architecture, history and beauty.

Trade and Investment

• For many decades, Czechoslovakia was one of India’s main trading partners among other the East-European countries. Many Czech companies have contributed in developing India’s industrial future by delivering the necessary equipment required for the power and engineering industries and sectors. Even in today’s world, the Czech Republic is very often associated in India with famous Czech companies like Skoda, Tatra, Bata and Zetor.
• The science and technology sectors are some of the most favourable areas of future cooperation between India and Czech Republic.  Sectors such as petrochemicals, food processing and civil aviation are also reported to be areas where both countries can benefit from each other.
• From 2012 onwards, bilateral trade between India and Czech Republic has amounted to about more than a billion U.S. dollars.
•  In 2017, the bilateral trade turnover was 1466 million U.S. dollars.
•  Czech companies mainly export cars, machinery energy facilities and turbines to India, while Indian companies mainly export electrical machinery, iron and steel, cotton and organic chemicals to Czech Republic. 
• Furthermore, Indian companies like Infosys, Ashok Leyland and Tata Tea have also invested in sectors of the Czech Republic such as IT, vehicles, textile, and tea. Inspired by the investment activities of companies such as Škoda Auto and Tatra in India, a number of other prospective Czech companies are considering investment projects in India in sectors like transportation, power, defence and machinery.
• An important sector of bilateral trade cooperation between the two countries is the automotive industry. Skoda Auto is flourishing in India with its widespread productions of Skoda cars as well as a collection of 106 outlets, 69 dealerships and 67 service centres across the country.
• The company’s engagement in building goods for the Indian defence industry is another activity that highlights the strengthening of economic relations between India and Czech Republic.
• By far, one of the biggest successes of a Czech company in India is that of Bata as it possesses an extensive sales network across the entire country.
• It was reported that the company expects India to serve as its most important market by the end of 2018

Czech Investment in India

The Indian market has established itself as a key destination for many Czech brands and companies. Czech companies work to establish themselves in the Indian market by offering high-quality products to local consumers. Czech companies are mainly emerging as investors in the fields of energy, finance, engineering and infrastructure.

The following is a list of some important Czech companies that have invested in India

• Skoda Auto: A premium automobile manufacturer in India.
• Skoda Power: The company supplies a large number of power blocks to India.
• Bata Limited: Leading footwear manufacturer
• Vítkovice Machinery Group: A leading industrial group
• ZKL Bearings CZ: Produces railway bearings
• Bonatrans: Production of railway and metro wheels
• Linet: Production of hospital beds and mattresses.
• FANS: Production of cooling towers
• Tatra: Manufactures trucks for defence purposes.

Indian Investment in Czech Republic

Many Indian companies, too, have established themselves in the Czech Republic due to the skilled Czech labour and comparatively low wages.

The following is a list of some important Indian companies that have invested in Czech Republic

• Infosys: Established an IT facility in Brno
• ArcelorMittal: Investment in steel plants in Czech Republic
• Ashok Leyland (Hinduja Group): Production of trucks
• Alok Industries: Manufactures textile material.
• Motherson Sumi Systems Limited: Leading automative manufacturer
• Fedders Electric and Engineering: Produces industrial heat exchangers and industrial coils.

Source: PIB

Source: Briefs on Foreign Relations

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