A new European Union strategy for India

Context:

• European Union has released its strategy document on India after 14 years.
• The 2004 EU-India declaration on building bilateral strategic partnership, which current strategy document replaces, did not have much of a success in reconfiguring the relationship as was expected.

About:

Strategy Document:

The new strategy underscores a transformative shift in Brussels vis-à-vis India and lays out a road map for strengthening the EU-India partnership.

Key focus areas includes:  

• Consideration of broader Strategic Partnership Agreement: The EU-India relations are currently governed by the 1994 EU-India Cooperation Agreement. To be able to match the ambitions set out in this Joint Communication and tackle the global challenges of today, the EU and India should consider the negotiation of a broader Strategic Partnership Agreement.
• Upgrade the yearly dialogue between the High Representative / Vice President of the EU and the Indian Minister for External Affairs to a regular Strategic Dialogue.
• Intensify dialogue on Afghanistan and Central Asia in the appropriate settings.
• Join forces on post-conflict institution building and reconciliation processes in third countries.
• Strengthen technical cooperation with India on fighting terrorism and countering radicalisation and violent extremism and countering terrorist financing.
• Exchange expertise on cyber security and hybrid threats.
• Conclude working arrangements to foster cooperation between Europol and Indian law enforcement institutions.
• Identify common actions with India both at policy and operational levels to enhance maritime security. Work with India and other key regional players such as South Africa to help build the capacity of maritime nations in the Indian Ocean and East Africa.

Background:

• In 1962, India was the 1^st developing country to establish diplomatic relations with European community.
• The EU-India Enhanced Partnership Agreement in 1996 appreciated India’s economic successes after the liberalization.
• EU-India Cooperation Agreement 1994 provides the legal framework for their relations.
• India and the EU have been strategic partners since 2004.
• The 14^th annual summit between India and European Union was held in October, 2017.

Areas of cooperation:

• Natural Partners: There is a new push in Brussels to emerge as a geopolitical actor of some significance and India is a natural partner in many respects based on principles of democracy, human rights, tolerance and internal diversity.
• Economic cooperation: EU is India's largest trading partner, accounting for 13.2% of India's overall trade. Further the trade in services has almost tripled in last decade. The EU is also the largest destination for Indian exports.
  • Major EU exports to India include engineering goods, gems and jewellery and chemical and allied products.
  • The primary EU imports include textiles and clothing, chemical and allied products and engineering goods.
• Key source of investment and technologies: The EU is the second largest investor in India.
• International scenario of protectionism and authoritarianism:
  • They share common responsibilities to secure peace and stability because of the current uncertainties in the global arena. The EU and India are very stable and predictable partners.
  • There is widespread disappointment with the trajectory of China’s evolution and the Trump administration’s disdain for its Western allies is highly disruptive.
• Cooperation on multilateral forum: The EU and India have similar views on multilateralism, underlining their full support for the United Nations and other multilateral forums, and EU is in favour of making UNSC more efficient and effective.
• Counter Terrorism issues and Global Counter Terrorism Forum: During India-EU annual counter terrorism and political dialogue, both countries are working on establishing direct links between Europol and Indian agencies.
• International Solar Alliance: The EU plans to join International Solar Alliance (ISA) by the year end. The EU has already financed the ISA secretariat as well as other programs. EU has invited India to escort World Food Programme vessels to transport food to Somalia.
• International Law: Both EU and India are strong promoters of the respect for international law, in particular UN Convention on Laws of the Sea (UNCLOS).
• Close coordination on regional issues: India coordinated closely with EU during the crisis in Maldives, while the two sides have intensified discussions on Sri Lanka, Bangladesh and Nepal.
• People-to-People Contacts: The India-EU Forum has emerged as an important Track II forum for discussion between policy analysts on both sides. It is led by the European Union Institute for Security Studies and the Indian Council of World Affairs and includes participation from academics and think-tanks.
• ICT Cooperation:
  • The EU and India aim to link the ‘Digital Single Market’ with the ‘Digital India.’
  • A new "Start-up Europe India Network" initiative was launched in 2016.
  • Further, an EU-India Cyber Security Dialogue has been set up that focuses on exchange of best practice on addressing cybercrime and strengthening cyber security and resilience.
• City to City Cooperation: There is city-to-city cooperation between European and Indian cities such as Mumbai, Pune and Chandigarh in a first phase and twelve more cities involved in the current phase. Now it is being formalized in an India-EU Partnership for Smart and Sustainable urbanization, which will support the Indian ‘Smart cities’ and 'AMRUT' initiatives.

Areas of conflict:

Issues in Broad-based Trade and Investment Agreement (BTIA):  India EU relations have been defined by the collective failure to complete a free trade agreement.

EU’s issues with India

• EU demands elimination of India’s duties on goods such as automobiles and wants tax reduction in wines, spirits and dairy products. These are the areas that will affect Indian farmers and competitiveness of their product.
• It seeking a strong intellectual property regime.
• EU is keen on finalization of an India-EU Bilateral Investment Treaty (BIT) before the re-launch of the FTA talks while India wants to make ‘investment protection’ a part of the negotiations on the proposed comprehensive FTA.
• India’s model BIT and its Investor-State Dispute Settlement Mechanism: It has become a contentious issue as it allows companies to seek international arbitration only when all domestic options have been exhausted.

India’s Issues with EU

• India is looking for data secure nation status to be granted by the EU. The country is among the nations not considered data secure by the EU. It will have a bearing on Indian IT companies wanting market access.
• Non-tariff barriers such as sanitary and phytosanitary measures, and technical barriers to trade are also a major concern. The EU has been imposing stringent labeling requirements and trademark norms, which have dented India’s exports.
• Trade in services: India demands strong binding promises by the EU on liberalising trade in service particularly Mode-4 services.
• Two-way trade between India and the EU dipped to $88.4 billion in 2015-16 from $98.5 billion in the previous fiscal.

Other areas of conflict:

• Indian government finds difficult to understand the bureaucratic structure of Brussels (EU) to navigate and in the process the EU was ignored as a collective.
• Individual nations of the EU started becoming more pragmatic in their engagement with India, but Brussels continued to be big-brotherly in its attitude on political issues and ignorant of the geostrategic imperatives of Indian foreign and security policies.
• The result is a limited partnership which largely remained confined to economics and trade.
• Even as the EU emerged as India’s largest trading partner and biggest foreign investor, the relationship remained devoid of any strategic content.
• China–EU relations: Despite the two not having any ideological affinity, the EU-China relations carried greater traction.

Way forward:

• In the past EU-India relations have been blocked by specific bilateral issues like the FTA or the Italian Marines issue, but foreign policy and security issues played an important role in the 14^th annual Summit, with far-reaching statements on naval exercises, space cooperation etc which two years ago would have seemed impossible.
• The new India strategy document unveiled by the EU comes at an appropriate time when both have to seriously recalibrate their partnership. India needs resources and expertise from the EU for its various priority areas, such as cybersecurity, urbanisation, environmental regeneration, and skill development.