EU-India relation is about two largest democracies of the world working together to collectively change the geo-political and economic dynamics of the new global order
Recently, the European Union unveiled its New Strategic EU-India Agenda setting out a range of areas for closer bilateral cooperation. The document hails India as the “world’s largest democracy” and a “like-minded and trusted partner”.
At a press conference held in Brussels, the European Commission and the High Representative Kaja Kallas adopted a Joint Communication outlining a ‘New Strategic EU-India Agenda’ marking a significant milestone in EU-India relations.
“Now is the time to focus on reliable partners and double down on partnerships rooted in shared interests and guided by common values. With our new EU–India strategy, we are taking our relationship to the next level. Advancing trade, investment and talent mobility, strengthening our joint economic security, advancing the clean transition and driving innovation together and deepening our industrial cooperation in defence. Europe is already India’s biggest trading partner, and we are committed to finalising our Free Trade Agreement by the end of the year. Europe is open for business and we are ready to invest in our shared future with India,” said Ursula von der Leyen, President, European Commission, on the occasion.
The EU’s new strategy for India aims to significantly strengthen the strategic partnership by focussing on five key pillars, namely trade and investment, technology and innovation, security and defence, connectivity and climate action.
The strategy was formally presented following a landmark visit to India by the College of Commissioners in February. Both sides anticipate formally adopting a roadmap and setting the agenda for their evolving partnership at the EU-India Summit, slated for early next year and both, the EU and India, hope to close the negotiations on the FTA within the next three months.
More than a recognition by the EU on its own of the importance of the bilateral ties with India, the ‘New Strategic Agenda’ has been propelled by a sequence of global events, and most importantly unilateral trade policy by the US President Donald Trump.
And as if to highlight the real reasons for the EU to go sweet on India, the ‘New Strategy’ has come in the backdrop of it imposing sanctions on an Indian refinery for refining Russian crude, ensuring it can’t sell refined oil to Europe.
Since then, US President Donald Trump has imposed 50 pc tariffs on India, saying half of it was a form of punishment for buying Russian fuel. In this context, EU’s New Strategy may be a strategy to lure India away from Russia’s orbit and also an attempt to keep India in the loop in EU’s policy to “de-couple” its economy from China.
What is significant is that the New Strategy was unveiled following the 13th Round of EU-India free trade negotiations in New Delhi, and before the upcoming 14th round likely to be held in Brussels next week, with the hope to sort out major differences.
The timing and an analysis of the New Strategy is thus interesting. For EU, the Strategy is an admission that geo-political power shift and geo-economic realities are influencing EU foreign policy forcing it to transform and reform itself to face the challenges of change in the changing world order. Prime Minister Narendra Modi’s participation in the recent Shanghai Cooperation Organisation (SCO) has inevitably drawn global attention, and especially the photograph of the troika, Modi-Putin-Xi, captured smiling and exchanging pleasantries at the SCO summit, have not gone unnoticed in the West. In fact, it has sent a chill down the spine of decision makers in Brussels.
Though this strategy has more teeth and also more substance and has come in the new situation and new environment, what it lacks is clear set of goals, with defined time lines. It is rich in rhetoric but low on how to achieve the objectives.
Also, despite India’s friendly relations with Russia, the EU has realised that India can be the best partner and with which it can do business democratically. There is also pressure from member countries of EU to better harmonise its relations with India. While the Trump factor might have influenced EU, but both EU and India are looking their relations beyond Trump.
This strategy fits well with EU principles and values and India is one country on which can be a reliable partner. Further, EU has realised that its aim of de-coupling its economy from China can succeed only by partnering with India. This time around, EU appears to be far more serious and comfortable with India than before. This strategy if put into action in real terms and also seriously, this will change and help EU in its credibility.
If New Strategy is successful, this will be a success of EU’s economic and political diplomacy. The EU has realised that in the new global order, it was not only important but a strategic necessity to strengthen ties with India. Also, the volatility of US politics under Trump has sent a message to EU and India that partnerships in today’s world must be judged not only by capability but also by predictability and timely action. Hence the change in EU’s policies towards India.
Old Wine in New Bottle
Indian Prime Minister Narendra Modi with European Commission President Ursula von der Leyen and EU Council President Charles Michel
The key pillar of the ‘New Strategy’ is not different from the EU-India Strategic Partnership: A Roadmap to 2025 which had been endorsed during the EU India Summit in July 2020 and which envisaged a common roadmap to guide joint action and further strengthen the EU-India Strategic Partnership over the next five years.
The EU-India Strategic Partnership: A Roadmap to 2025 had outlined a five-year plan to deepen collaboration between the European Union and India in areas including foreign policy, security, trade, digital technology, green energy and sustainable development. The New Strategy in 2025 is different from 2020 in the sense that today India is the most populous nation, soon going to become the fourth largest economy, and in the five years when the New Strategy completes its life, India is set to become the third largest economy of the world.
New strategy and unlocking the power of partnership
The elements of new EU strategy on India provide the policy framework for the EU’s deeper and broader engagement with India over the coming years. The new vision statement has the required objective to serve as the blueprint for a new dawn in the EU-India relations which goes beyond the realm of strategic partnership and opens the door for new engagement.
It assumes higher degree of significance because the vision strategy outlines the common challenges and provides the policy framework for the EU’s deeper and broader engagement with India over the coming years. The New Strategy will, however, remain at the crossroad in absence of swift action by two partners.
It is not out of place to say that despite sharing a congruence of values and democratic ideals, India and the EU have both struggled to build a partnership that can prove to be instrumental in shaping the geopolitics and geo-economics of the 21st century. This new strategic convergence of foreign policy interests of the two thus throws open a window of opportunity for greater cooperation on strategic issues of security and global governance.
Realisation of importance of EU-India relations
EU-India relation is about two largest democracies of the world working together to collectively change the geo-political and economic dynamics of the new global order. The changing dynamics of strategic partnership with global perspective in focus, it will impact global trade and economic scene in the coming years.
For India, the growing realities in EU-India relationship offers more than a foundation of mutual benefit. It offers a strong commitment for reinforcing a rules-based order in in the Indo-Pacific region. Therefore, it makes sense for New Delhi to strengthen this unique, multifaceted, and future-oriented relations with Brussels which can deliver a beneficial balance of power without the limits of a formal architecture.
It is important to understand that EU’s relations with India are neither complex nor consequential but managing it requires a careful calibration with long term vision. Along with structural framework and policy mechanism of reimagining India’s relations with the EU, there is something more than the institutional thinking, how India and Europe are re-imagining about each other. In the last few months, the EU is actively worked to take the relationship to the ‘next level’ by focussing on mutual interests and shared values.
New Delhi should not ignore the fact that EU is one of the greatest economic successes of the century. It has its critics, but it has proved that it remains a stabilising model of Union, and an inspiration for many more to join the Club. The integration of the EU is just not an obligation but a credible commitment which has transformed the EU as an extraordinary successful machine for generating prosperity and helping the poorer member states to catch up.
The success of the New Strategy will remain perpetually handicapped if trade relations between the two countries remains un-reformed and the goal of a free trade agreement remains a dream. The EU-India relation has remained a hostage to the domains of trade and largely on the free trade negotiations. However, in the corridors of power in Brussels and in New Delhi there is a thinking that sharing of strategic responsibilities and adjusting to the new challenges is extremely important, and both EU and India must rise to the occasion to play a role in the global power and politics propelled and influenced by geo-political and geo-strategic shift. Indeed, impact of Ukraine crisis has its imprint in the New Strategy.
India and the EU have some key differences in tariff and other trade issues. This is an economic challenge to the ongoing free trade negotiations, but challenges and differences are part of the world, and both parties can overcome these and build a more comprehensive relationship that benefits each other and is suitable for the regional and international community.
Maroš Šefčovič, EU Trade Commissioner, recently said that trade talks between EU and India have shown little sign of a quick breakthrough, with differences over car market access still unresolved.
“I wouldn’t hide that the negotiations are extremely challenging,” he had declared. Even after agreeing to leave out some food produce from negotiations, he said, clinching what would become the bloc’s biggest trade deal by year’s end would still be a “big challenge.”. But there are enough indications that both parties are seriously attempting to overcome the differences.
It is understandable that EU may sometimes become frustrated by the long time frame in decision making by India on some policy issues, but the Europeans need to understand that they are dealing with a continent which is not autocratic but a democratic nation and any major policy reform that will impact the lives of 1.4 billion people will have to go through a political process, however frustratingly rigorous and time consuming it may appear to other nations.
Strategic shift
There is a distinct strategic shift in EU’s New Policy towards India which has focussed so far only on trade and investment. Thus, the EU’s new strategy underscores a transformative shift in Brussels future relations with India with strengthening technical cooperation on fighting terrorism, and countering radicalisation, violent extremism and terrorist financing. The new policy has the potential to alter the current texture of their relationship and help build a new roadmap for durable partnership in the 21st century.
Both EU and India are keen to conclude the FTA negotiations by the end of the year. There shall be political and business pressure on the govt to go slow on economic reforms and free trade negotiation, but Modi must not succumb to the pressure if he wants to make India a USD 5 trillion economy in the next three years.
A trade agreement cannot be without tears but opening the market, trade and investment are the key to success and if Modi govt succeeds in concluding the free trade negotiations, he will go down in the history as a man who seized a desperate moment and turned this into a huge opportunity for India, the key to leadership greatness. The future holds lot of promises for European Union and India relations and if EU and India wish to make their relation a successful partnership, they must not look back at the failures of the past, but what together they can achieve in pursuit for a common future.
(Sunil Prasad is the Secretary General of Brussels based Europe India Chamber of Commerce. The views expressed here do not necessarily reflect those of Media India Group.)