The European continent is characterized by high standards of life, developed countries marked by prosperity and affluence, presence of immense opportunities for learning and growing, strong economic credentials and robust political institutions.
In the light of this background, it becomes imperative for India to establish solid and valuable links with the European countries. India is seen to achieve the same through her relations with the European Union at large.
India-EU Relations date to the early 1960s, with India being amongst the first countries to establish diplomatic relations with the European Economic Community. A cooperation agreement signed in 1994 took the bilateral relationship beyond trade and economic cooperation.
The first India-EU Summit took place in Lisbon in 2000 and marked a watershed in the evolution of the relationship.
At the 5th India-EU Summit at The Hague in 2004, the relationship was upgraded to a ‘Strategic Partnership’.
The two sides adopted a Joint Action Plan in 2005 (which was reviewed in 2008) that provided for strengthening dialogue and consultation mechanisms in the political and economic spheres, enhancing trade and investment, and bringing peoples and cultures together.
The EU is a significant trade partner for India and the two sides have been attempting to negotiatea free trade deal since 2007.
Areas of Cooperation
Political Partnership
The Joint Political Statement signed in 1993, opened the way for annual ministerial meetings and a broad political dialogue.
The Cooperation Agreement signed in 1994 took the bilateral relationship beyond trade and economic cooperation.
A multi-tiered institutional architecture of cooperation has since been created, presided over by the India-EU Summit since 2000. The relationship was upgraded to a ‘Strategic Partnership’ during the 5th India-EU Summit held in 2004.
n 2018, EU’s strategy on India entitled “A Partnership for Sustainable Modernization and Rules-based Global Order” was issued by the European Commission and the EU High Representative for Foreign Affairs and Security Policy.
It views India as an emerging global power that plays a key role in the current multipolar world and a factor of stability in a complex region and calls for greater India-EU political, security and defence cooperation.
India-EU Agenda for Action 2020 endorsed by the 13th India-EU Summit in 2016 serves as a framework for exchanges and cooperation between India and EU in various sectors.
Further, the bilateral Strategic Partnership encompasses thirty one dialogue mechanisms covering a wide range of issues including trade, energy security, science & research, non-proliferation and disarmament, counter terrorism, cyber security, counter-piracy, migration and mobility, etc.
Today EU stands as a major reference for India’s legislative process in the field of Data security and privacy.
Economic Ties
Bilateral trade:
The EU is India’s third largest trading partner, accounting for €62.8 billion worth of trade in goods in 2020 or 1% of total Indian trade, after China (12%) and the US (11.7%), while India is the EU’s 10th largest trading partner, accounting for 1.8% of EU total trade in goods in 2020, well behind China (16.1%), the USA (15.2%), and the UK (12.2%).
The EU is the second-largest destination for Indian exports (14% of the total) after the USA.
The largest sectors of India’s Exports to the EU are engineering goods, pharmaceuticals, gems and jewellery, other manufactured goods and chemicals.
Additionally, over 6,000 European Union companies are said to operate in India, providing direct and indirect employment to over six million people
Investment:
The EU’s share in foreign investment inflows to India has more than doubled from 8% to 18% in the last decade. This makes the EU an important foreign investor in India.
With the establishment of an Investment facilitation mechanism for EU investments in India in 2017, there is a renewed focus on facilitating ease of doing business norms for EU investors in India.
This mechanism allows for close coordination between the Indian government and the EU to formulate solutions to the issues and problems faced by EU investors in operating in India
Also, India and the EU have been working on a Broad-based Trade and Investment Agreement (BTIA) since 2007, but India’s trade regime and regulatory environment remains comparatively restrictive
Preferential treatment: India is the benefactor of the unilateral preferential tariffs under the EU Generalised Scheme of Preferences (GSP), which reduces import duties for almost 66 percent of product tariff lines with an aim to support various industrial sectors in the developing countries.
Energy: Both sides have finalised civil nuclear cooperation agreement after 13 years of negotiations called as the European Atomic Energy Community (EURATOM). It involves collaboration in the civil nuclear energy sector.
Development cooperation:Over €150 million worth of projects by EU are currently ongoing in India. European Investment Bank (EIB) is providing loans for Lucknow, Bangalore, and Pune Metro Projects.
Defence & Security
EU and India have instituted several mechanisms for greater cooperation on pressing security challenges like counter-terrorism, maritime security, and nuclear non-proliferation.
The 6th India-EU Foreign Policy and Security Consultations were held in 2018 to review the ways and means of strengthening India-EU Strategic Partnership.
Information Fusion Centre – Indian Ocean Region in New Delhi (IFC-IOR) has recently been linked-up with the Maritime Security Centre – Horn of Africa (MSC-HOA) established by the EU Naval Force (NAVFOR).
Climate Change
EU and India also underline their highest political commitment to the effective implementation of the Paris Agreement and the UNFCCC despite US withdrawing from the same.
India-EU Clean Energy and Climate Partnership was agreed at the 2016 Summit – to promote access to and disseminate clean energy and climate friendly technologies and encourage R&D.
Energy cooperation is now ongoing on a broad range of energy issues, like smart grids, energy efficiency, offshore wind and solar infrastructure, and research and innovation.
The EU has also invested in numerous programmes such as India-EU water partnership, solar park programme, and Facilitating Offshore Wind in India (FOWIND).
The major investments was the signing of the 200 million EUR loan agreement between the EIB and the Indian Renewable Energy Development Agency.
EU and India also cooperate closely on the Clean Ganga initiative and deal with other water-related challenges in coordinated manner.
Ministry of Earth Sciences (MoES) and the European Commission (EC) have established a co-funding mechanism (CFM) to support joint research projects selected under European Research & Innovation Framework Program ‘Horizon2020’ related to climate change and polar research.
ISRO has a long-standing cooperation with the European Union, since 1970s. It has contributed towards the EU’s satellite navigation system Galileo.
ISRO and the European Space Agency are working towards enhancing cooperation in earth observation.
A Joint Working Group (JWG) identifies cooperation opportunities in areas such as earth science, space science, space technology and integrated applications.
A Cooperation Arrangement between the European Commission and the Department of Space pertaining to the Copernicus programme signed in 2018 provides a framework for the exchange of data and wider cooperation in the space sector
Further, India and the EU are working closely on several fronts that cover the Sustainable Development Goals (SDGs) — such as the smart cities initiative (SDG 11), clean water and sanitation (SDG 6) and climate action (SDG 13)
The two have become key stakeholders in global efforts to combat climate change through the framework of Clean Energy and Climate Change Partnership, 2017
Both have official mechanisms in fields such as Digital Communications, 5G technology, Biotechnology, artificial intelligence etc.
Maritime Cooperation
The Joint Action Plan adopted in 2005, highlighted and emphasized on maritime cooperation.
In the past few decades, both India and the EU have stressed on the idea of freedom of navigation, maritime piracy, and adherence to United Nation Conventions on the Law of the Sea (UNCLOS) and the development of the blue economy and maritime infrastructure.
Both have identified the Indo-Pacific as the new avenue for maritime cooperation.
In January 2021, India and the EU hosted the first Maritime security dialogue in a virtual format.
Data Protection and Regulation
The Roadmap 2025 document for the first time reflected the need to build effective cooperation on data protection and regulation
During the 15th India-EU Summit, both sides agreed for greater convergence of the regulatory frameworks through data adequacy decision for the facilitation of cross-border data flow as well as engaging in dialogue regarding safe and ethical usage of AI and 5G.
Future scope
Trade figures and Investments: Bilateral trade between the two surpassed $116 billion in 2021-22. The EU is India’s second largest trading partner after the U.S., and the second largest destination for Indian exports.
Job creation: There are 6,000 European companies in the country that directly and indirectly create 6.7 million jobs.
Green strategic partnership: between India and Denmark aims to address climate change, biodiversity loss and pollution, and the India-Nordic Summit focused on green technologies and industry transformation that are vital for sustainable and inclusive growth.
Energy security: Energy serves as an important aspect of the relationship between India and the EU. Given the impacts of climate change, this aspect has become extremely crucial today. Both entities have been pursuing cooperation for the joint development of clean energy.
Political cooperation: India and the EU may benefit from increasing cooperation in the resolution of issues such as terrorism and radicalization, cyber-security, coordinating on certain key and relevant aspects of foreign policy, and other humanitarian issues.
International support: It is crucial that Europe recognize India as a partner for peace that is committed to human rights, both regionally and internationally.
Challenges
Deadlock over BTIA: The negotiations for a Broad-based Bilateral Trade and Investment Agreement (BTIA) were held between 2007 to 2013 but have remained dormant/suspended since then.
Export hurdles: Indian demands for ‘Data secure’ status (important for India’s IT sector) to ease norms on temporary movement of skilled workers, relaxation of Sanitary and Phytosanitary (SPS), etc. stands largely ignored.
Trade imbalance: This heavily leans towards China. India accounts for only 1.9% of EU total trade in goods in 2019, well behind China (13.8%).
Brexit altercations: In the longer term of balancing of global powers, a smaller Europe without the key military and economic force UK, is much weaker in the wake of an ambitious China and an increasingly protectionist US.
EU primarily remains a trade bloc: This has resulted in a lack of substantive agreements on matters such as regional security and connectivity.
Undue references to sovereign concerns: 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.
China’s influence: EU’s affinity lies with China. This is because of its high dependence on the Chinese market. It is a major partner in China’s Belt and Road Initiative (BRI).
Ukrainian war: EAM S. Jaishankar’s witty reply about EU’s oil import from Russia has not been welcomed across the EU. It still expects India to criticize Russia.
EU’s interests in India
Reducing dependence on China: It is necessary for both sides as it is making them highly vulnerable to Chinese aggression.
Western lobby: EU acknowledges its supply chain’s vulnerability, the risk posed by overdependence on China, and the need to strengthen the global community of democracies.
Healthcare: The on-going pandemic has shown the need for cooperation in global health. India and the EU have called for a reform of the World Health Organisation (WHO).
Perception of India as a huge market: EU still largely perceives India as huge market rather than a partner.
Promotion of multilateralism: Both sides are facing issues related to US-China trade war and uncertainty of the US’ policies. They have common interest in avoiding a bipolarised world and developing a rules-based order.
India’s stakes in EU
Global leadership vacuum: Retreat of the U.S. from global leadership has provided opportunities for EU- India cooperation and trilateral dialogues with countries in the Middle Fast, Central Asia, and Africa.
Chinese Aggression: China’s increasing presence in Eurasia and South Asia is creating similar security, political and economic concerns for Europe and India.
Fall of the conventional global order: Trade war, crumbling WTO and break down of TPP etc. has made EU understand the economic importance of India.
BREXIT: Brexit is pushing India to look for new ‘gateways’ to Europe, as its traditional partner leaves the union. A renewed trade and political cooperation are the need of the hour.
Conformity over Indo-Pacific: The Indo-Pacific is the main conduit for global trade and energy flows. Rule-based Indo-pacific is of everyone’s interest with EU no exception.
Way forward
A close bilateral relation between India and the EU has far-reaching economic, political and strategic implications on the crisis-driven international order.
Both sides should realise this potential and must further the growth of the bilateral ties with a strong political will.
As highlighted by EU strategy on India 2018, India-EU should take their relations beyond “trade lens”, recognizing their important geopolitical, strategic convergences.
India can pursue EU countries to engage in Indo-pacific narrative, geo-economically if not from security prism.
