india-eu-relations

Context- Recently, a virtual India- European Union leaders meeting was held between the Indian Prime Minister and 27 EU leaders. 

Background

  • Due to the changing geopolitical circumstances around the world, the perception of India has been changed in Europe which can also be reflected in this virtual summit.
  • In 2018, the EU released a new strategy for cooperation with India calling it a geopolitical pillar in a multipolar Asia that is essential for maintaining the balance of power in the region.
  • From Indian perspective, collaboration with the EU can help in promoting peace, creating jobs, boosting the economy growth and enhancing sustainable development.
  • Therefore, India and the EU appear to be natural partners and they need to leverage the existing opportunities in order to strengthen their multi sectoral cooperation.

Highlights of the Virtual Summit

  • Resumption of Free Trade Agreement (FTA) talks- The most significant outcome of the virtual summit was that after about 8 years, both India and the EU decided to resume the negotiations for a comprehensive trade agreement between them. 
    • These talks were suspended in 2013 on failure by both sides to bridge their differences on some of the key issues like tariff reductions, patent protection, data security and the right of Indian professionals to work in Europe.
  • Resumption of Bilateral Investment Treaty (BIT) talks- Both sides also agreed to commence their talks for a standalone investment protection path and an accord on geographical indications.
  • Connectivity Partnership- The virtual summit saw India and the EU launching an ambitious “connectivity partnership” in digital, energy, transport and people to people sectors that enables the 2 countries to pursue sustainable joint projects in regions spanning from Africa, Central Asia to the wider Indo Pacific.

India and the EU- Natural Partners

  • Need of EU to pivot away from China- The EU recently signed a comprehensive agreement on investment with China. However, since the agreement drew a lot of criticism, its ratification has now been suspended because of diplomatic tensions. 
    • The European Parliament remains overwhelmingly opposed to this agreement since China imposed sanctions on some of its members, in response to the EU imposing sanctions against China for its treatment of Uighur Muslim minority community in the Xinjiang province of China.
  • Economic logic- since the EU is the largest trading partner of India and the second largest export destination, strong India economic relations are self-evident for economic gains of both the countries. Further, India wants to showcase its commitment to open trade at a time of renewed focus on developing a domestic manufacturing base.
  • Convergence in Indo Pacific theatre- The EU is being forced to reckon with the geopolitical implications of its foreign policy imperatives and India is looking for substantive partnerships with like minded countries in order to bring stability to the Indo Pacific theatre. 
    • Moreover, India has also been looking beyond the bipolar geopolitical competition between the USA and China and has been constantly working towards the establishment of a multipolar world.
  • Cooperation in global health- Given the current situation and looking at the severity of the current crisis created by the pandemic, health cooperation has assumed a new science among the countries. The member states of EU have rallied to support India by sending critical medical supplies in the last few weeks in recognition of India's role in helping others over the last year in overcoming the pandemic.
  • Combating Climate Change- India can learn from a new industrial strategy called the Green Deal of the EU to render its carbon emission neutral by 2050. The EU and India can also endeavour transforming into carbon neutral economies by 2050 by investing in clean energies together. In India's efforts to increase the use of renewable energy in India, the investment and technology of Europe is of paramount importance.

Significance of the EU for India

  1. Economic- The 27 member bloc is India’s one of the largest trading partners and also a potential source of FDI. India has an untapped export potential of $39.9 billion in the EU and Western Europe. India and the EU are in the process of negotiating a bilateral Broad-based Trade and Investment Agreement (BTIA).
  2. Security- The EU Agency for Law Enforcement Cooperation or Europol and CBI are negotiating a working arrangement to support law enforcement authorities of EU member states and India to prevent and combat organised crime and terror. Indian Navy vessels are escorting WFP ships in the framework of the EU Atalanta operation against piracy off the coast of Somalia
  3. Climate Change- The EU is one of the champions in dealing with the climate change crisis. India-EU climate and energy relations are guided by the India-EU Clean Energy and Climate Partnership aiming at reinforcing cooperation on clean energy and implementation of the Paris Agreement by strengthening joint activities for deployment of climate friendly energy sources, including solar and wind energy. Also, in 2018 the EU joined efforts with the International Solar Alliance, headquartered in India.
  4. Strategic- The EU can be a reliable partner in countering China and its influence in our neighbourhood especially when it shares the goal of security in the Indo Pacific region. The EU officials described the recent India-China border standoff on the LAC as a matter of considerable concern.
  5. Nuclear- It would involve collaboration in the civil nuclear energy sector, including research and development aimed at the peaceful use of nuclear energy.

Challenges affecting the Relationship between India and EU

  1. Trade Practices- The BTIA negotiations have remained deadlocked over growing differences regarding greater market access sought by both sides for merchandise exports. In addition, the EU is also critical about India’s “protectionist” measures on tariffs and on opening up India’s services sector for European Companies.
  2. CAA and Art 370- The EU has been critical about the abrogation of Art 370 in Jammu and Kashmir and the passing of the Citizenship Amendment Act (CAA) which according to India is an internal and sovereign matter for it.
  3. Lopsided Investments- India still has a lot of scope for improvement in investment especially when compared to EU investments in China.

Way Forward

  • Negotiations for the formalisation of BTIA have been pending since 2007. A closer convergence between the two countries for finalisation of the deal as soon as possible.
  • Addressing the mutual trust deficit, facilitating people’s mobility and connectivity to improve mutual understanding and create opportunities for innovation and growth.
  • Enhancing cooperation between India and EU on climate change, technology, security, etc.
  • India can engage the EU member states to engage in the Indo pacific narrative at least geopolitically if not from a security point of view. This can help in mobilising massive economic resources for sustainable development of regional infrastructure, wield political influence and leverage its significant soft power to shape the Indo-Pacific discourse.

Conclusion

Post ­Brexit EU finds itself in the midst of a growing need for recalibrating ties with its partner countries. In addition to this, the post pandemic world will give an opportunity for countries to re-evaluate the fundamentals of their engagement. India should critically review the availability of such arrangements in its negotiations, as also their operationalisation and effectiveness. This would also help in realising the vision of a self-reliant India that would entail localising an increasing share of value added along supply chains through investments and phase wise reduction of import tariffs with strategic partners including the European Union (EU).

Source- Indian Express