The rift with the US, Chinese assertiveness, tensions with Russia and Brexit have pushed the EU to look for reliable partners — India, despite its limitations, can use its geopolitical and economic strengths to further develop ties
The 15th India-European Union (EU) summit will take place via video conferencing on July 15 under the shadows of COVID-19 and India-China tensions. These two issues are likely to impact summit outcomes. Prime Minister Narendra Modi will interact with the European Council President Charles Michel, and President of the European Commission Ursula von der Leyen. The summit is also the first major international meeting taking place under the German presidency of the Council of the EU.
Economics has been at the core of the ties. With more than $140 billion combined trade in goods and services in 2018-19, the EU has been India’s largest trading partner. Compared to a huge trade deficit with China, India-EU trade is balanced. In the last 20 years, FDI from the EU (including the United Kingdom) has been more than the combined investment inflows from the United States, Japan and China put together. A large number of Indian companies have financial or technical collaborations with European firms.
The desire for a multi-polar world and strong economic linkages led to the establishment of strategic partnership in 2004; joint action plan in 2005 and the start of free trade agreement (FTA) negotiations in 2007. In between, the partnership lost momentum. The FTA negotiations were frozen in 2013. There was no summit for a few years.
The last two summits in 2016 and 2017, however, brought new energy to the partnership. An ambitious Agenda for Action 2020 was agreed. Several visits by Modi to various European capitals and the Indo-French Rafael deal have deepened India’s strategic engagement with Europe.
The ties have already become more strategic in the sense that many discussions are taking place beyond trade and investment. The bilateral institutional mechanism now spans over 30 dialogue mechanisms. These include foreign policy and security, climate change, energy, environment, water, counter-terrorism, maritime security, cyber security, science and technology, urban development, migration and mobility, among others.
The EU’s new India strategy acknowledges India’s impressive economic growth and modernisation. It asserts that commonalities between the two have grown and advocates India playing a bigger role in a multi-polar world “which requires a multipolar Asia”.
EU’s new foreign policy chief Josep Borrell Fontelles believes that with the US retreat the western-led order is in crisis; China is becoming assertive; and there is also a crisis of multilateralism. As EU’s suspicions about China are growing, it is looking for further improving its ties with Asian partners, particularly with India and Japan.
Partly in response to China’s Belt and Road Initiative (BRI), the EU has announced the Europe Asia connectivity strategy. As India has its own connectivity ambitions and reservations about the BRI, the summit may initiate a new dialogue on connectivity. As the EU has already started a new dialogue on China with the US, New Delhi should upgrade its conversations on Beijing with Brussels through a structural mechanism.
The economic impact of COVID-19 is clearly visible in Europe and India. The latest European Commission estimates shows that the EU economy is will contract 8.3 percent in 2020. Similarly, the Indian economy will shrink about 4.5 percent this year. Obviously, economic conditions are not very conducive for bold economic initiatives; yet, a new momentum can be generated by re-starting FTA negotiations.
Operationalisation of the EU-Vietnam FTA will start hurting Indian marine, apparel, footwear and furniture exports to the EU. As Vietnam is also part of the Regional Comprehensive Economic Partnership (RCEP), it may start attracting EU investments as well. Sensing troubles, Commerce Minister Piyush Goyal says that India is open for discussions for an early harvest preferential trade agreement both with the UK and the EU.
The rift with the US, Chinese assertiveness, tensions with Russia and Brexit are pushing the EU for other reliable partners. Despite limitations, New Delhi, with all its geopolitical and economic strengths, could develop a serious partnership.
Europe could also be a useful partner to mitigate the health and economic implications of COVID-19. As both have a strong pharma sector, new policy initiatives could facilitate joint efforts in finding affordable diagnostics, new treatments and vaccines. India already sells sizable pharma ingredients to the EU, and imports significant medical devices.
The new Roadmap 2025 is likely to focus on India’s sustainable modernisation, a rule-based global order and climate issues. Policy co-ordination and mutual understanding are also needed on issues dealing with Africa, Afghanistan, Central Asia, China, Iran and Russia. Also, upgrading the ad-hoc dialogue on human rights will be a good chance for New Delhi to allay some EU concerns about the Jammu & Kashmir and Citizenship (Amendment) Act.Gulshan Sachdeva is Chairperson, Centre for European Studies & Coordinator, Jean Monnet Centre of Excellence at Jawaharlal Nehru University, New Delhi. Views are personal.