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Cyprus and India share a longstanding relationship rooted in shared historical experiences, common values, and similar approaches to international issues. Since their independence, both countries have developed diplomatic and economic ties, emphasizing mutual respect and cooperation. The relationship between Cyprus and India is not only based on historical connections but also extends into the strategic dimensions of contemporary geopolitics.
Establishment of Diplomatic Ties
India was one of the first countries to recognize Cyprus when it gained independence in 1960. Diplomatic ties were quickly established, and both nations set the tone for a cooperative and supportive relationship. India’s recognition and support for Cyprus’s independence reflected its broader commitment to the principle of self-determination and non-interference in the internal affairs of other countries.
Establishing diplomatic relations also set the foundation for deeper political and economic cooperation. Indian embassies and diplomatic missions were established in Cyprus and Cypriot representatives were welcomed in India, signifying the beginning of a robust and enduring partnership.
High-level Visits
The personal rapport between leaders has also been a crucial aspect of Cyprus-India relations. High-level visits between the two countries have further cemented this bond. Indian Prime Ministers and Cypriot Presidents have visited each other’s countries, signifying the importance they place on maintaining and deepening the bilateral relationship.
These visits have served not only as diplomatic engagements but also as opportunities to discuss and collaborate on issues of international importance, such as peacekeeping, economic cooperation, and cultural exchange. These high-level interactions have been a constant reminder of the historical solidarity between the two nations and their shared commitment to a peaceful and just international order.
The historical foundations of Cyprus-India relations are deeply rooted in shared values, anti-colonial solidarity, and a commitment to sovereignty and justice. Collaborating in international forums like NAM and the United Nations, the two countries have demonstrated mutual support and understanding. This has laid the groundwork for a strong and enduring relationship that continues to evolve in the contemporary geopolitical landscape.
India’s External Affairs Minister, Dr. S. Jaishankar, made one of the most recent visits to Cyprus in September 2022. This visit was instrumental in reaffirming India’s long-standing support for Cyprus’s sovereignty and territorial integrity. In early 2023, an Indian business delegation visited Cyprus to explore investment opportunities, particularly in the financial services, IT, and technology sectors. Senior officials led the delegation from India’s Ministry of Commerce and representatives from Indian corporations.
President Nicos Anastasiades visited India in April 2017, a visit that was highly anticipated for its potential to elevate Cyprus-India relations to new heights. The President’s meetings with Indian leaders, including Prime Minister Narendra Modi, focused on expanding economic and strategic ties. The then Foreign Minister of Cyprus, Ioannis Kasoulides, visited India in December 2022, marking an important step in strengthening the bilateral partnership. His visit included high-level meetings with Indian counterparts, including Dr. S. Jaishankar, and other senior officials. The focus of these meetings was to discuss regional and global issues, including the Eastern Mediterranean situation, and to explore new areas for collaboration.
Dr. S. Jaishankar held a bilateral meeting with his Cyprus counterpart Constantinos Kombos on the fringes of the 78th United Nations General Assembly (UNGA) session. The two leaders had a productive engagement as India’s interest in the Mediterranean is steadily growing and Cyprus will continue to be a valued partner.
The recent visits by Indian delegates to Cyprus and Cypriot leaders in India have significantly strengthened Cyprus-India relations. These high-level interactions have expanded economic ties, reinforced political and diplomatic support, and initiated new strategic and security collaborations. As Cyprus and India continue to deepen their partnership, these visits highlight a shared commitment to building a relationship that is multi-dimensional and mutually beneficial, ensuring that their ties remain strong and resilient in an evolving global landscape.
Development of Economic Cooperation
While the early years of diplomatic ties focused on political solidarity, the 1980s and 1990s marked a gradual shift toward economic cooperation. Cyprus and India recognized the potential for expanding their relationship beyond diplomatic support to include trade and investment. Several agreements were signed during this period to promote bilateral trade, investment, and economic cooperation.
The primary focus areas during this time included cooperation in the fields of education, culture, and professional services. Cypriot businesses and Indian companies began to explore opportunities in each other’s markets. The signing of agreements for the promotion and protection of investments and for avoiding double taxation provided a legal framework that encouraged businesses from both countries to invest and engage commercially.
Additionally, Cyprus became a gateway for Indian businesses looking to access European markets. The strategic location of Cyprus in the Eastern Mediterranean and its advantageous position within the European Union (EU) attracted Indian companies, particularly in sectors like IT, pharmaceuticals, and financial services. This shift toward economic cooperation laid the foundation for the deeper and more diverse economic ties that would follow in the subsequent decades.
Expansion and Diversification of Economic Ties
In the 21st century, the economic relationship between Cyprus and India expanded significantly, with both countries taking proactive steps to enhance their commercial and investment ties. The Cyprus Investment Promotion Agency (CIPA) began to actively promote Cyprus as an attractive destination for Indian investors, particularly in the fields of professional services, information technology, tourism, and financial services.
India, being one of the world’s fastest-growing economies, became a lucrative market for Cypriot investors. Cyprus, in turn, offered Indian businesses access to the EU’s vast market through its advantageous tax regime, business-friendly environment, and high-quality professional services sector. This mutual benefit has allowed for a diversified economic partnership. Cyprus has emerged as a significant source of foreign direct investment (FDI) into India, and Indian companies have increasingly established operations in Cyprus to leverage its access to European markets.
The signing of the Double Taxation Avoidance Agreement (DTAA) in 1994 was a milestone in their economic relationship. This agreement provided businesses with a stable and favourable environment for investment, minimizing tax-related issues and uncertainties. In 2016, the agreement was revised and updated to enhance transparency and compliance with international standards.
India as a Key Investor in Cyprus
Indian companies, particularly in the IT, financial services, pharmaceuticals, and construction sectors, have established a significant presence in Cyprus. Cyprus’s strategic location, which serves as a gateway to Europe, the Middle East, and North Africa, has made it an attractive destination for Indian businesses seeking to expand their operations beyond Asia. The country’s favourable business environment, supported by a well-regulated financial services sector and a highly educated workforce, has further incentivized Indian firms to set up offices and subsidiaries in Cyprus.
Cyprus, in return, has benefited from Indian investments in various sectors. The influx of Indian companies has helped diversify Cyprus’s economy, particularly in the period of global financial crisis post-2008. Indian companies in sectors such as IT and pharmaceuticals have contributed to economic growth and employment in Cyprus, enhancing the economic relationship between the two countries.
One of the most prominent aspects of Cyprus-India economic ties is their collaboration in the financial sector. Cyprus has become an important hub for Indian companies seeking financial services, banking, and investment opportunities. Indian firms have utilized Cyprus’s position within the EU to raise capital and expand their global footprint. The country’s favourable tax policies, robust financial regulations, and extensive network of double taxation treaties with other countries make it a preferred destination for Indian investors. Indian banks and financial institutions have also set up operations in Cyprus to facilitate investment and banking services for Indian businesses.
Agreements and MoUs Supporting Economic Cooperation
To facilitate the growing economic cooperation between Cyprus and India, several agreements and Memorandums of Understanding (MoUs) have been signed over the years. These agreements cover a wide range of areas, including trade, investment, education, tourism, and technology transfer.
Trade and Economic Cooperation Agreements: Agreements aimed at enhancing trade relations have helped increase the volume of goods and services exchanged between the two countries. These agreements often focus on reducing trade barriers, improving customs cooperation, and promoting business-to-business (B2B) engagements.
Technology Transfer and Innovation: In recent years, Cyprus and India have emphasized collaboration in technology and innovation. Cyprus, with its growing tech industry, offers opportunities for Indian tech firms to collaborate on innovation, research, and development projects. MoUs in technology and innovation have helped foster partnerships between Indian and Cypriot companies, focusing on emerging sectors like information technology, renewable energy, and pharmaceuticals.
Maritime Security and the Indo-Mediterranean Strategic Outlook
India’s strategic interests in the Mediterranean region have grown over the years, especially in the context of its ‘Act West’ policy, which complements its ‘Act East’ approach. Cyprus, located at the crossroads of Europe, Asia, and Africa holds significant strategic value. India has shown interest in collaborating with Cyprus on maritime security issues, recognizing the importance of safe and secure sea lanes for global trade and energy supplies.
Both countries share concerns regarding the stability of the broader Middle East and North Africa (MENA) region. Cyprus, being part of the European Union and situated close to the Middle East, has a critical role to play in maintaining regional stability. India’s strategic outlook in the Mediterranean region aligns with Cyprus’s interests, as both nations seek to promote peace, stability, and cooperation in the region.
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