italy-india-partnership-in-the-coronavirus-crisis

Context: Recently both India & Italy courageously decided to strike a fine balance between the need to restore industrial activities and supply chains and the duty to continue protecting their citizens from the spread of the novel coronavirus.

Similarity between India’s Lockdown 3.0 & “Phase 2” of Italy: Both countries have relaxed lockdown to kickstart their economies. Both countries need to put their economies and societies on hold to contain the virus. Simultaneously both nations need to be able to look forward and give our citizens and our businesses a positive outlook in the immediate future.

Steps taken by Italy: ‘Phase 2 of Italy’’

  • Nearly 50 economic and industrial activities were allowed on a national scale.Italy allowed 4.5 million people to go back to work.
  • It enabled nearly three million people employed in the public sector to develop digital processes and streamlined procedures so as to support the prompt resumption of activities by the private sector. 
  • Directives for workplaces and public places: These are based on measures that will resonate with the reader: wearing of face covers; thermal scanning; frequent sanitisation; adequate distancing.
  • Financial stimulus: the Italian government has already provided guarantees up to €500 billion to make sure that Italian businesses can have access to the necessary liquidity. 

Steps taken by India: Lockdown 3.0 

  • The gradual relaxation of the nationwide lockdown starting May 4: A new report by HSBC Global Research finds that only “40% of the economy will continue to remain disrupted thanks to the relaxations which divided the country into three different zones — red, orange and green.

  • The Atma-nirbhar Bharat Abhiyan (or Self-reliant India Mission): It is worth Rs 20 lakh crore or 10% of India’s GDP in 2019-20 — aimed towards achieving this mission.
    • PM announced an economic package totaling Rs 20 lakh crore to tide over the Covid-19 crisis under ‘Atmanirbhar Bharat Abhiyan’. 
    • The Rs 20 lakh crore package includes the government’s recent announcements on supporting key sectors and measures by Reserve Bank of India.
  • LTRO operations: RBI has been coming out with long term bond buying operations (long term repo operation or LTRO, to infuse liquidity into the banking system) worth Rs 1 lakh crore at a time.
  • India is developing the “Digital Embassy” project that will allow us to create many tools and processes to virtually interact and support our nationals, our businesses and our Indian counterparts.

State of India-Italy relations: 2018 was the year of the 70th anniversary of diplomatic relations between the two countries.

  • Political Relations: Political  relations  between  India  and  Italy  were  established  in  1947.  The  two  countries enjoy cordial relationship.Recently,  the Italian Prime Minister’s visit led to a relative reset in India-Italy relations.
  • Economic Relations: Amongst EU members-states, Italy is India’s 5th largest trading partner (following Germany, Belgium, UK and France). 
    • Indian exports to Italy are driven by petrochemical, plastic, textile and steel. Italian exports towards India amount to 1% of Indian total import. 
    • Italy is the 27th global supplier to India, while is the 10th market of destination of Indian exports.
    • Italy’s presence in India accounts for slightly less than $3 billion investment cumulatively between April 2000 and June 2018. Those investments are mostly in the automotive industry, trading, services, industrial machinery and food processing.
  • Indian diaspora in Italy: Italy hosts the third largest Indian community in the European Union, with an estimated 1,80,000 people, after the UK and the Netherlands. Indian labour is particularly active in the agriculture and dairy industry.

Significance of India and Italy’s partnership

  • Strong manufacturing base: Italy is the eighth largest economy in the world and the third largest in the Eurozone after Germany and France with a GDP of $1.86 trillion. 
    • It is also the world’s sixth largest manufacturing nation, dominated by small and medium enterprises clustered in many industrial districts. 
  • Brexit: Half of the stock of Indian investments in the EU is actually in the UK. Indian investors are therefore looking for alternative entry points to access the EU market. Italy represents a perfect opportunity for that.
  • The geopolitical dynamics between India and Europe:  India has tried to open its policy towards Europe, Europe has become more inward looking following Brexit and the rise of the far right parties throughout the region. So India is looking to build a bridge to the EU.
    • The partnership between India and Europe in upholding the liberal order becomes a priority. India does not have the capacity to do it on its own and needs support from like minded nations like Italy.
    • Balancing China by building its internal capacity: India’s current capacity is not enough in the short to medium term. India has been widening the network to engage with like-minded countries.
    • Both India and Europe are facing Donald Trump on one side and China on the other, an economic partnership is crucial and must not be overlooked.
  • Bringing public goods and global commons to focus:
    • G20: Italy and India will be holding the consecutive Presidencies (Italy in 2021 and India in 2022) of the G20, one of the world’s main fora for global governance. 
    • Fight against climate change: Italy will co-host the 26th session of the Conference of the Parties, COP26, in 2021, together with the United Kingdom, and India is one of the world’s major responsible stakeholders.
  • Africa: Both India and Italy are stepping up their engagement in the continent, with the aim of managing migration flow — for Italy — and fostering developing cooperation — for India.

Concerns

  • Lower trade: India and Italy have been trade partners since the Roman era, and so it is unfortunate that India has such a low volume of trade and investment. 
  • The Enrica Lexie Case, where two Indian fishermen were killed by Italian marines in 2012, the event was a big mistake — this tragic fact quickly became politicised.
  • Italy’s current political instability: Italy is in a very precarious position – with a nationalist, naturalist near fascist on one side and a populist movement on the other.
    • The financial crisis, the uncertainty post Brexit, the rise of populism in Italy and throughout Europe, and the resurgence of neo-fascism in Eastern European countries all affect Italy.
  • Italy is the ‘Achilles heel of Europe’ having one of the lowest growth rates at 1.5% with high youth unemployment at 30% and increasing debt at a worrying 133% of its GDP. 
    • Several factors have contributed to Italy’s current predicament, some of which include restrictive labour laws, high taxes and excessive red tape
    • Worsening the situation is the refugee crisis where Italy was left to deal with by itself as the EU's solidarity did not work for Italy or for the crisis itself.

Way forward:

  • Both countries should shape the international discourse around priorities that both countries hold dear: 
    • from taking advantage of our economic complementarity to strengthening our partnership based on shared values
    • on our thriving creating industries
    • scientific knowledge and technological prowess
    • from the development of a rules-based international system to the promotion of just trade
    • inclusive growth and the realisation of the 2030 Agenda. 
  • Supporting an effective multilateral system, which would be the best political accelerator to win our battle against the novel coronavirus and to promote a sustainable, equitable and durable recovery. 
  • Improving trade: the potential of India and Italy as trade partners can be further explored if India and European Union (EU) sign the Bilateral Trade and Investment Agreement (BTIA) which has been in negotiation for over 11 years without conclusion.
  • Improving relations between EU and India by the recently adopted EU Strategy for Connectivity in Asia.

In a nutshell, at both bilateral and multilateral levels, our dialogue will be based on the main tenets of innovation and sustainability. Because this crisis has transformed the urge to develop new ideas, methods, processes and devices into the “new normal”.

Source:

https://www.thehindu.com/opinion/lead/italy-india-and-a-common-thread-in-partnership/article31568643.ece

https://www.orfonline.org/research/seventy-years-of-india-italy-relations-what-lies-ahead/

https://mea.gov.in/Portal/ForeignRelation/Italy_09-02_2016.pdf

https://www.orfonline.org/expert-speak/modi-conte-meeting-strengthens-indo-italian-relations-45290/

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