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5.4] India EU Relations

India EU Relations

1. Introduction

The relationship between the EU and India reflects the complex historical contexts of the connections between Europe and South Asia. EU and India together account for almost 2 billion of the world’s population. Their governance structure is based on an adherence to the principles of democracy, rule of law and cultural pluralism. Their common adherence to democracy and pluralism at home, and multilateralism abroad, has provided a sound basis for the evolving India-EU relationship.

2. History of India-EU relations

2.1 Early Developments in India EU Relations

Prior to Indian independence, nearly one million Indian soldiers in the First World War and two million in the Second helped secure peace in Europe at critical moments.

The bitter experience of both the wars led to the creation of EU. A rare instance in history of long-standing, bitter rivals coming together to cooperatively create a rich and peaceful existence for their people. French Civil Servant Jean Monet, often called ‘The Father of Europe’, put forth the notion of ‘a united Europe’ which called for the eventual ceding of state sovereignty to a supranational European government and the establishment of shared institutions across the continent.

Following the Treaty of Rome, the European Economic Community (EEC), European Coal and Steel Community (ECSC), and European Atomic Energy Community (EURATOM) were established in 1957.

India established formal ties with the EEC in 1963 when it accredited its first ambassador to the organisation. It was acknowledged that this would not replace or come at the expense of India’s expanding bilateral ties with certain member states, such as Belgium, the Netherlands, Germany, France, Italy, and Luxembourg.

In recognising the EEC, India would appear to have prepared itself for the forthcoming break with its colonial past. When UK joined EEC in 1973, India lost the Imperial Preferences, which had previously governed our commercial relationship with our major partner Britain. UK demanded that a fresh connection be established with the European grouping.

Initially, India tried to investigate the potential of an Association Agreement with EU, similar to those between EU and Mediterranean basin countries and later between EU and African, Caribbean, and Pacific (ACP) countries. India’s attempt was unsuccessful, since the European Commission (EC) deemed all of the south Asian nations to be “non-associable.”

(A European Union Association Agreement or simply Association Agreement (AA) is a treaty between the European Union (EU), its Member States and a non-EU country that creates a framework for co-operation between them. Areas frequently covered by such agreements include the development of political, trade, social, cultural and security links.)

India carved out a new path under the guidance of Dr KB Lall, the then Ambassador of India to the EEC. He devised the Commercial Cooperation Agreement (CCA) which took the EEC’s GSP (Generalised System of Preference) as a starting point and added the dimensions of trade development and trade promotion. It was based on sovereign equality between the two entities and restructured India-EEC relations in a way in which it would not conflict with India’s bilateral relations with the member states.

The first CCA was signed in 1973 and was expanded till 1993 to include economic cooperation and investment in keeping with the changing needs and priorities of the relationship. Another novel idea was the India-EEC Trade Centre, which was set up in the early 1980s to promote Indian exports. In 1981, India and the EEC signed a five-year Commercial and Economic Cooperation Agreement. Further visibility was gained by the EEC in 1983 when the EC Delegation was established at New Delhi.

The EU, for a long time, was India’s largest economic partner. In 1984, Indian imports from the EU represented 23 per cent of its total imports, as compared to 10 per cent from the US, 7 per cent from Japan and 6 per cent from the former Soviet Union. Indian exports also were marked by the similar trend with 20 per cent being accounted for by the EU, 24 per cent by the US, 10 per cent by Japan and 12 per cent by the former Soviet Union. Although the 1980s witnessed enhanced trade and commercial relations, it was the end of the Cold War that provided the impetus to moving India–EC relations forward.

2.2 India-EU Relations After Cold War

The 1994 Cooperation Agreement on Partnership and Development is a foundational agreement for the post-Cold War partnership between India and EU. The agreement took the bilateral relationship beyond trade and economic cooperation. The political aspect it brought forth was a clear acknowledgment of India’s evolving role in South Asia and the prosperity of its economic trajectory after the reform initiative. The EU viewed India’s economic liberalisation as a positive trend that should be supported and advanced.

The relations observed a little hurdle following India’s and Pakistan’s 1998 nuclear tests. For some time, EU agreed with the US that the subcontinent had become ‘the most dangerous place on earth’.

In the words of Dave Allen, ‘whilst the EU has sought to make the most of its post-Westphalian characteristics, India and almost all the other established or emerging powers remain firmly Westphalian in their nature and outlook’. India’s ‘jettisoning of moralpolitik in favour of realpolitik’ in the wake of the 1998 nuclear tests has provoked ‘disdain in India for the EU’.

The first India-EU Summit took place in Lisbon in June 2000 and marked a watershed in the evolution of the relationship. It highlighted the consensus between all EU members to positively engage with India with a political thrust.

The Fifth Summit at The Hague, in the year 2004 was also a landmark Summit and it approved the Strategic Partnership between India and the EU. It took a little over 30 years for India to ascend from a ‘non-associable’ to a ‘strategic partner. This partnership is based on the ‘future potential’.

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.

In hindsight, these developments in 2004-05 can be seen as the EU’s acknowledgement of India as a regional force that was steadily gaining traction on a wide range of global concerns, giving rise to fresh justifications for interaction and strengthening of partnerships with it.

3. Present Status of India EU Relations

3.1 India Europe Trade Relations

From Euro 4.4 billion in 1980, India-EU trade turnover was Euro 60.9 billion in 2008, and 124 billion Euro in 2023. Similarly, EU is one of the largest sources of Foreign Direct Investment (FDI) for India (96 bn Euro in 2021). India has also emerged as a major investor in the EU with total investment reaching 6.2 billion Euro in 2021.

Given that the EU is India’s third-largest commercial partner, the failure to effectively negotiate the relationship’s main initiative—the long-awaited EU-India Free Trade Agreement (FTA)—has likely been the main critique levelled at the strategic alliance between the two countries. The EU-India FTA, which was introduced in 2007, is a comprehensive trade and investment agreement that covers important interests for both sides in the areas of products, merchandise, agro commodities, pharmaceuticals, and services.

The financial benefits of such a collaboration would dramatically change the players’ already improving fortunes and give their economies a major boost in the Eurasian region. The negotiations reached a standstill in 2013 after sixteen rounds, and they didn’t get back up until the latter part of 2018. The lack of a well-thought-out bilateral trade policy has led to market asymmetry, which has repeatedly resulted in the EU filing cases against India in the World Trade Organisation (WTO) over various issues, most notably import duties and intellectual property rights. India and the EU resumed talks for a free trade deal in 2022. Moreover, separate talks were also started for an accord on geographical indications and investment protection.

3.2 Other Areas of Cooperation

Apart from trade relations, there has been substantial progress on strengthening people-to-people contact as well. The initiatives like India Window (2009-2013) to Erasmus Mundus scholarship programme, scientific and technical cooperation, EU assistance through partnerships with selected Indian state, the use of EU’s budgeted funds for supporting Indian government’s programmes on health and education etc. have supported this trend.

India and EU also have a unique forum, the India-EU Round Table for Civil Society Interaction, which brings together civil society organisations for both the entities. Furthermore, the political cooperation between the two has been enhanced by the special relationship between European and Indian Parliaments.

3.3 India EU Summits

Annual summit-level dialogues have been the cornerstone of India-EU relations. The first India-EU summit, held in Lisbon 2000, was a successful venture, which laid the roadmap for future partnership. The fifth India-EU Summit (2004) upgraded the relations to that of strategic partnership. Simultaneously, following the sixth India-EU summit held in New Delhi, both sides adopted the Joint Action Plan (JAP), which set out the roadmap for a strategic partnership between the two. The JAP included the strengthening of the dialogue and consultation mechanisms, deepening of political dialogue and cooperation and enhancing of economic policy dialogue and cooperation.

During the ninth summit (2008), India and the EU reviewed the JAP and a revised JAP was adopted adding 40 new elements in India-EU cooperation. During the 15th India-EU summit held virtually in 2020, an ambitious Roadmap to 2025 document was adopted. The most recent 16th India-EU Summit was held in 2021. These summit-level meetings have provided a platform for both India and the EU to agree or disagree on a broad range of issues.

3.4 Trade Technology Council

In April 2022, the decision to establish an EU-India Trade and Technology Council (TTC) was first announced by India’s Prime Minister, Narendra Modi and the European Commission President, Ursula von der Leyen.

The EU-India TTC was launched in February 2023 and is EU’s second such endeavour after the one with the United States. The TTC aims to increase bilateral cooperation, boost bilateral trade and investment (in the same context as the free trade agreement under negotiation between the two parties), and to capitalise on both parties’ strengths to ensure their technological and industrial leadership while preserving their shared values.

Experts note that the TTC is part of a joint effort to steer the EU and India closer towards strategic autonomy by reducing the EU’s dependence on China, and India’s reliance on Russia.

In its current configuration, the TTC has three working groups that focus on

  1. Strategic technologies, digital governance and digital connectivity,
  2. Green and clean energy technologies, and
  3. Resilient value chains, trade and investment

4. India’s Relations with EU Countries Individually

EU is largely an Economic Union. Thus, there is little scope for developing relations in other fields like politics and security. Further, given the large nature of EU, the progress of relations is often slow. As a way out, India has opted to strengthen bilateral relations with prominent countries from Europe.

4.1 India France Relations

France holds significant weight in EU and also a key partner for India. According to some commentators, from an Indian perspective, ‘France can be new Russia’.

There is increasing defence cooperation between India and France. The defence partnership includes joint exercises, technology transfers (like the Rafale deal), space cooperation, nuclear energy cooperation and also collaboration on the production of submarines. Further, France also has a strategic presence in India ocean (naval base in Djibouti and island territories like Reunion). Thus, it shares India’s vision of free and open Indo-Pacific.

India and France also share similar perspectives on climate change and mitigation efforts. India has supported France in the Paris Agreement expressing its strong commitment to mitigating the effects of climate change. Both countries, as part of their joint efforts on climate change, launched the International Solar Alliance in 2015.

Further, on backdrop of Russia’s increasing dependence on China, India is no more assured of Russia’s support on Kashmir, while in France, India has found a reliable partner. France has supported India’s bid for UNSC permanent membership as well as its entry into the Nuclear Suppliers Group.

4.2 India Britain Relations

As suggested by C Raja Mohan in his article ‘A New Shine to Old Ties’, between India and UK, there is significant shift from a past marked by ‘entrenched pessimism’ to a present brimming with ‘expansive new possibilities.’ This newfound pragmatism is driven by a shared desire to capitalize on mutually beneficial opportunities in diverse areas like trade, investment, high technology, defence, and regional cooperation.

The US recognized India’s growing global influence and adopted a policy of supporting its rise, paving the way for a stronger US-India relationship. This, in turn, influenced Britain’s approach towards India. Further, as the US shifted towards a “confrontational stance” towards China, Britain followed suit with its own “Indo-Pacific tilt,” aligning its foreign policy more closely with India and the US.

There are also some persisting challenges to the relations. Unlike the US and France, which prioritize India in their South Asia strategies, Britain still grapples with the conflicting pulls of its ‘new enthusiasm for India’ and its historical ties with Pakistan. While India acknowledges this complexity, it expresses confidence that Pakistan’s declining regional influence will make it a less significant hurdle in the future.

Then there is a challenge from the internal political dynamics of both countries. The British domestic politics, particularly on issues like Kashmir, can sometimes negatively impact India-Britain relations. However, Delhi is also learning to navigate these complexities and leverage the interconnected political landscape shaped by the large South Asian diaspora in Britain.

Beyond shared interests, India and Britain also hold strategic value for each other. Despite progress of Indian Economy, Britain remains a significant player on the global stage, boasting a robust economy, a permanent seat on the UN Security Council, and a leading role in technology and cyber power. Recognizing these strengths, India seeks to leverage British capabilities for its own strategic benefit, paving the way for a deeper and more comprehensive partnership.

Thus, the current period is marked by a pragmatic approach focused on mutual benefits and a shared vision for Indo-Pacific region. This collaborative approach, coupled with the changing geopolitical landscape and the recognition of each other’s strategic value, paves the way for a stronger and more resilient India-Britain partnership in the years to come.

4.3 Other Countries

Germany is the most populous country in Europe and also with highest GDP (within Europe) of $ 4.3 bn. It is also India’s largest trading partner in Europe. The bilateral trade between countries hovered around $26 billion in 2023, up from $ 24.8 bn in 2022.

There are further active efforts from India to strengthen strategic partnership with Netherland, Belgium, and the Nordic countries. India is also reviving its relations with the countries of South and Central Europe. Recently many high-level exchanges took place.

5. Conclusion

A new endeavour to revitalise and de-ice the India Europe partnership has been undertaken since 2014, with new leaders in charge of affairs in both the EU and India. With a new president at the European Commission headquarters in Brussels and a new team and organisational structure, the EU-India partnership has a renewed outlook, dynamism, and vigour to develop into a true global strategic partnership.

In the end, the success of the relationship will crucially depend on whether the two entities can truly deal with each other as sovereign equals. This contrast is important in the context of the importance India and EU will give to each other’s evolving world view in a world characterised by unprecedented interdependence coupled with instability. It will be of greatest relevance on issues like human rights and observance of core labour standards, nuclear export controls and application of pharmaceutical standards and cooperation to achieve MDGs.

The then Indian Prime Minister Manmohan Singh declared at the 2006 Helsinki India –EU Summit, ‘India and the EU are natural partners as we share common values of democracy, pluralism and the rule of law’. Despite this, the challenge for the India–EU strategic partnership is to balance norms and realism. While formally labelled as ‘strategic’, the European Union (EU) – India partnership is more often than not described as ‘lukewarm’ and ‘reluctant’.

Prof. Ummu Salma Bava writes that ‘Given the difference in the capability of states at the normative and material level, there is inherent asymmetry in strategic partnerships, which often signify that relationships are about power and interdependence’. India and EU, both share same values and political outlook; and this ‘ideational proximity should be converted into interest convergence’.

6. Scholar’s Quotes on India-EU Relations

C Raja Mohan

“EU’s ‘post-modern orientation is in essence a convenient escape from confronting emerging challenges’. Hence, many in India consider themselves to be tied down in a ‘loveless arranged marriage’ with the EU.”

“In the colonial age, India looked at Europe through the British eyes. The so-called Great Game was about keeping Britain’s European rivals — including France, Russia, and Germany — away from the Subcontinent. In the post-colonial age, India flipped the paradigm by aligning with Russia to limit European influence in the region. After the Ukraine war, a new paradigm is beckoning India — strong commercial and security partnerships with Europe that stand on their own merit and bring the many synergies between them into active play.”

“Europe is looming larger than ever in India’s strategic calculus”

“Indian soldiers saved Europe’s bacon twice in the last century. Intense and wide-ranging defence cooperation between India and France today could contribute immensely to Eurasian security this century.”

“As the deepening confrontation between the US and China begins to squeeze Southeast Asia, Europe is widely seen as widening the strategic options for the region”

S Jaishankar

“Europe is truly a priority for India”

“We expect the India-EU FTA will be a game changer for the India-EU relationship. We look forward to a mutually beneficial, mutually advantageous conclusion to the negotiation process within a reasonably short planned timeline,”

“Europe and India can strengthen each other’s strategic autonomy by reducing dependencies, cooperating on critical technologies and ensuring supply-chain restructuring. The India-EU FTA is, therefore, our very important goal,”

“India’s relations with Europe are stronger and deeper than ever before… Between us rests the largest democratic and free market space globally. The business communities of India and Europe have a large stake and an enabling role in this transformation.”

‘Europe has to grow out of mindset that its problems are world’s problems’

Other Quotes

“India and Europe still need each other” – Richard Gawan

“Europe summons up a big yawn for us.”

“There is no commitment from the top in Europe on cooperation with India. All it brings to us are complaints about climate change and human rights.”

“European defence starts in the Hindu Kush.”

“India may be a difficult partner. But contrast the EU’s attitude with US persistence, over a decade and three administrations, which has led to a breakthrough in its relationship with India, now coming to fruition.”

Posted in PSIR NOTES

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