India-e.u. Relations
History & Background
- The ties between India and the EU date back to the early 1960s, with India being one of the first countries in the European Economic Community to develop diplomatic relations.
- The Cooperation Agreement was signed between the two in 1994, creating partnerships beyond commercial and economic cooperation.
- In 2000, the first India-EU Summit took place. The relationship was upgraded into a 'Strategic Partnership' in 2004.
- A Delegation for Relations with India was formally constituted in the European Parliament in 2007.
Economic and business ties:
o EU as a block is India's largest trading partner, accounting for €80 billion worth of trade in goods in 2019 (11.1% of total Indian trade).
o Also, EU is the biggest foreign investor in India, with €67.7 billion worth of investments made in 2018 (22% of total FDI inflows).
Cooperation in defence:
In order to resolve pressing security issues such as counter-terrorism, maritime security, and nuclear non-proliferation, the EU and India have introduced many frameworks for greater cooperation.
Science and Technology collaboration:
o EU is supporting the Mobilize Your City (MYC) programme in India currently in three pilot cities to reduce their urban transport-related Green House Gas (GHG) emissions.
o India and the EU set up an Energy Panel in 2005 for cooperation in energy and energy security and both cooperate on forums such as EU-India Clean Energy Cooperation and India-EU Water Partnership.
o Also, both have official mechanisms in fields such as Digital Communications, 5G technology, Biotechnology, artificial intelligence etc.
People to People Relations:
o India and the EU organize Festivals of culture (e.g. Europalia-India festival), exchanges on heritage such as yoga & Ayurveda etc.
o Both signed Horizontal Agreement on Civil Aviation in 2018 to boost bilateral travel and tourism.
o Both sides also inked the Common Agenda on Migration and Mobility (CAMM) in 2016 as a framework for cooperation on migration.
o There are over 50,000 Indian students currently studying in various European Universities, many of whom are under EU’s Erasmus Mundus scholarship programme for higher education.
Factors shaping India-EU relations in the current times:
o Changing Geopolitical developments: As highlighted by EU strategy on India, released in 2018, EU sees EU-India relations in the context of broader geopolitical developments, primarily the rise of China. Impact of China in Europe and Asia (e.g. Belt and Road initiative) has pushed EU to change the nature of its partnerships in the region, particularly with India.
o Convergence of interests in the Indian Ocean: Increasing Naval base race and security competition in the Indian Ocean region will impact both Europe and India as the Indian Ocean is the main conduit for global trade and energy flows. India, EU see each other as partners in securing the Indian Ocean by strengthening institutions, rule of law, and a regional security architecture.
o Retreat of the U.S. from global leadership and uncertainty of US policy under Trump has provided opportunities for EU- India cooperation and trilateral dialogues with countries in the Middle Fast, Central Asia and Africa.
o Strategic rivalry between the US and China: Both EU and India have a common interest in avoiding a bipolarized world and sustaining a rules-based multilateral trading system with the United Nations and the World Trade Organization at its core.
o Green governance: After the US exit from the Paris climate agreement, India and the EU stand to gain from a joint leadership on global governance matters such as climate change, clean energy or circular economy.
o New emerging world order after COVID-19: As EU seeks to move away from a global supply chain that is overly dependent on China, India can emerge as its most natural ally. EU and India could find a common path in ensuring supply chain resilience to reform the global system in response to health emergencies.
Concerns in relations:
- Stalled EU-India BTIA: It is being negotiated since 2007 and both sides have major differences on crucial issues such as-
o EU’s demands: significant duty cuts in automobiles, tax reduction on wines, spirits etc, a strong intellectual property regime, relaxation in India’s data localisation norms, protection to all its items with Geographical Indication etc.
o India’s demands: ‘Data secure’ status (important for India's IT sector); Ease norms on temporary movement of skilled workers, relaxation of Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT) norms etc.
- Trade imbalance: India accounts for only 1.9% of EU total trade in goods in 2019, well behind China (13.8%).
- India’s perception of EU: It views EU primarily as a trade bloc, preferring bilateral partnerships with Member States for all political and security matters. This is evident from lack of substantive agreements on matters such as regional security and connectivity.
- Brexit: It is unclear how U.K.’s withdrawal from EU will affect India’s relation with EU as whole.
- Human Rights concerns of EU: The European Parliament was critical of both the Indian government’s decision to scrap Jammu and Kashmir’s special status in 2019 and the Citizenship (Amendment) Act.
Way ahead
- The EU and India should work in third countries to consolidate democratic processes and develop the capacity of transitional regimes by improving electoral and parliamentary structures in order to translate their shared values into joint action.
- Setting up a trilateral dialogue with other like-minded partners such as Japan or Australia and India can help in improving the EU’s visibility in the region.
- BTIA agreements should be completed in a timely manner in order to realise the full potential of the commercial partnership between the EU and India.
- The EU should work with India to promote connectivity and infrastructure projects in third countries , particularly in smaller South Asian states, which are often exposed to power politics and fiscal uncertainty as a result of Chinese loans and political leverage as part of the BRI.
- In their external actions, the EU and India should follow a concerted approach to different common priorities for sustainable growth, such as global decarbonisation of resources, a new resource-efficient economy with smart urbanisation and a sustainable environment focused on renewable energy.
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Therefore, as illustrated in the 2018 EU India Strategy, India EU should take its ties beyond the 'trade lens' and consider its major geopolitical and strategic convergences.