Expert Speak Raisina Debates
Published on Feb 08, 2022
Over 60 years of friendship, both India and the EU have maintained robust strategic relation;, however, in some critical areas, there is still room for enhanced cooperation.
India and the European Union: A relationship yet to achieve its true potential

In 2022, India celebrates its 75th Year of Independence with the Government of India (GOI) launching “Azadi ka Amritsav”, an initiative to celebrate and commemorate 75 years of Indian Independence. The initiative embodies India’s socio–cultural, political, and economic identity and one critical element of building an identity is through diplomacy. This year India celebrates 60 years of friendship with the European Economic Community (now the European Union). India was one of the first countries and the first Asian country to extend diplomatic relations with the European Economic Community in 1962, when Ambassador K.B. Lall presented his credentials to Mr Walter Hallstein, the first President of the Commission of the EEC. Since then, India–EU relations have progressively developed, where it evolved into a strategic partnership in the 21st century. The reasons for the establishment of a strategic partnership between the two is not solely on the political front but also derives its roots in historical partnerships which over decades has developed India’s idea of Vasudhaiva Kutumbakam. The tales of Maharaja Jam Saheb Digvijaysinhji Ranjitsinhji are narrated in Poland till today as his courage and bravery saved over 1,000 Polish children working in the labour camps of the Red Army in the USSR. The extreme winter conditions marked the exodus of Poles from Siberia as thousands sought to seek a warmer climate in the Central and South Asian countries. Maharaja’s decision to accept the Polish children in Jamnagar began the story of Little Poland in India, where intensive efforts were made to honour the Polish culture and tradition. After WWII, the Polish refugees were repatriated around the world, but the Polish society remains indebted towards Maharaja Jam Saheb, who was awarded Poland’s highest honour in 2016 to honour him on his 50th death anniversary. Historical references such as Maharaja’s assistance truly illustrate India’s values and beliefs in its foreign policy.

The trade relations between India and the EU began blossoming in the 1990s as the Indian economy underwent liberalisation after seeking support from the International Monetary Fund (IMF), which included a comprehensive set of reforms and reforming of capital markets in India.

Since the beginning of diplomatic relations in 1962, India and the EU have worked closely on development partnership as the EEC funded several developmental projects in India which was slowly transforming into a modern society. The EEC extended its cooperation in India’s Operation Flood, which was launched on 13 January 1970, and changed India’s dairy architecture also commonly known as the ‘White Revolution’. The EEC donated skimmed milk powder and butter oil through the World Food Program (WFP) which effectively transformed India from a milk deficient nation into the world’s largest milk producer over three phases. In the 1960s, India’s largest trade partners in the European community were the United Kingdom and West Germany as India–EU trade incrementally increased from US$ 1.638 billion in the 1960s and 1970s to US$ 5.701 billion in 1980. As of 2021, the bilateral trade between India and the EU is valued at €65.30 billion with greater market penetration across both regions in comparison to their relations in the twentieth century. The trade relations between India and the EU began blossoming in the 1990s as the Indian economy underwent liberalisation after seeking support from the International Monetary Fund (IMF), which included a comprehensive set of reforms and reforming of capital markets in India. Similarly, the EEC gave way to the establishment of the European Union, when the Maastricht Treaty was signed in 1992 that laid the foundation for the EU provisions such as shared European citizenship, the introduction of a single currency, and the development of Common Foreign and Security Policy (CFSP). Since the 1990s, India–EU relations catapulted as trade relations grew, political engagement increased significantly but most importantly, people–to–people relations grew exponentially between the two as thousands of Indian students chose Europe as a learning hub.

Figure 1: Important Timeline in the India – EU Relations

1962 Establishment of diplomatic relations between India and the European Economic Community (EEC)
1973 India – EEC Commercial Cooperation Agreement
1978 First Agreement between European Space Agency (ESA) and the Indian Space Research Organisation (ISRO) was signed
1981 New Economic and Commercial Cooperation Agreement
1981 Europe’s Ariane 3 rocket launched India’s first geostationary satellite APPLE
1993 Signing of Joint Political Statement
1994 Signing of Cooperation Agreement on Partnership and Development
2000 The Joint Declaration of the First India – EU Summit
2001 Signed the India – EC Science and Technology Cooperation Agreement
2004 Strategic Partnership at the Fifth India – EU Summit
2005 Adoption on Joint Action Plan on Maritime Cooperation
2005 India and the EU jointly Set up an Energy Panel
2007 Started negotiations on a Broad-Based Trade and Investment Agreement (BTIA)
2007 Establishment of the EU – India Macro-Economic Dialogue
2008 Expanded India – EU Cooperation in the fields of nuclear energy and environmental protection
2012 Signed the Joint Declaration on Enhanced Cooperation in Energy
2012 Enrica Lexie Incident
2013 Halted negotiations on a Free Trade Agreement
2013 Inauguration of Europalia India Festival
2015 India rejects a non-binding resolution passed by the European Parliament on Enrica Lexie Case
2017 European Investment Bank (EIB) opened its first office for the South Asian Region in New Delhi
2020 India–EU Strategic Partnership: Roadmap to 2025
2020 Establishment of a High-level Dialogue on Trade and Investment (HLDTI)
2021 Resumption of Free Trade Negotiations
2021 Inaugural India–EU Maritime Security Dialogue

The Joint Political Statement and the Cooperation Agreement was signed between India and the EU in 1993 and 1994 respectively, which became the foundational agreement for this bilateral relationship. However, the bilateral ties were furthered in 2004 at the 5th India–EU summit when India and the EU became strategic partners. India is one of the 10 countries that the EU has narrowed down as its strategic partners as both economically and politically, India plays a central role in the EUs affairs. India is its 10th largest trading partner, and the EU is India’s third-largest trading partner negotiations for a broad-based Bilateral Trade and Investment Agreement (BTIA) was held between 2007–2013 but negotiations were suspended after multiple impasses on issues about India’s trade regime and hesitancy in engaging in trade agreements accompanied with other technical, legislative, and administrative trade barriers. However, at the India–EU summit in May 2021, both parties decided to resume negotiations on a free trade agreement and the level of cooperation and collaboration between New Delhi and Brussels has expanded significantly in the COVID-19 pandemic era.

Figure 1: Trade Timeline of India – EU Trade Relations: 1960s – 2020s

Source: Data obtained from Eurostat Comtext – Stastical Regime 4; Graph is author’s own description.

In 2020, at the 15th EU–India Summit, the two sides also adopted “India–EU Partnership: A Roadmap to 2025” to further strengthen the India–EU Strategic partnership. The roadmap highlights cooperation in five critical domains—Foreign Policy and Security Cooperation; Trade and Economy; Sustainable Modernisation Partnership; Global governance; and people-to-people relations. Similarly, before the 16th India–EU summit in 2021, the EU announced its Indo–Pacific Strategy which highlights Europe’s interest in the region coupled with its ambitions to counter its systemic rival. The EU through its Indo–Pacific Strategy aims to promote rules-based regional security architecture in the region by aligning with like-minded allies and India lies at the centrality of the EU’s grand strategy. The region is the new epicentre for geopolitics as it homes more than 60 percent of the world’s population and accounts for more than two-thirds of the global economic output. For India, the region has been of prime importance for centuries as it perceives the region as a free, inclusive region that embraces all in a common pursuit of progress. Maritime cooperation between India and the EU has emerged as a critical area of cooperation as both have stressed upholding international law in the high seas and adherence to the UNCLOS.

Figure 2: European Union’s Trade with India by Group 2010 – 2020

India and the EU hosted the first Maritime security dialogue in January 2021 where both discussed cooperation in maritime domain awareness, capacity-building, and joint naval activities. A stronger interdependence between Europe and the Indo–Pacific in areas such as trade and investment ties with regional actors such as India and ASEAN can alleviate European economies and help Europe achieve its ambitions of becoming a global power in the 21st century. Moreover, a collaborative effort in the region should aim at promoting linkages rather than entangling economic dependencies and debt traps. The EU's Global Gateway initiative offers Brussels an opportunity to support infrastructure development around the world as the European Commission has earmarked €300 billion between 2021–2027 for connectivity projects. The Gateway initiative is Europe’s method of building resilient connections with the world where the EU attempts at promoting linkages over debt traps.

Figure 3: Indian Imports of Goods to the EU (Member States Distribution – 2020)

India–EU relations have witnessed progress both politically and economically, but the potential remains unmatched and unmet due to reluctance from both sides. For both India and the EU, China forefronts a major challenge that requires specific attention. The EU is divided over its China policy with the increased disjunction between its member states on policies on China. The growing disjuncture remains a key problem for the EU in its policymaking and decision-making process, and with greater geopolitical challenges surrounding Europe, such divergence could be fatal for Brussels. India and the EU are two of the largest democracies in the world sharing common values and principles and with the rise of multipolarity, both sides can elevate their strategic partnership to realise the true potential between New Delhi and Brussels to find solutions for impending geopolitical challenges. 

Figure 4: Total Trade between India and the EU 2010 - 2020

Source: Eurostat and UN COMTRADE Database on International Trade; Author’s own description

Connectivity is one of the major pillars of engagement between the two as physical connectivity, human connectivity and digital connectivity can be the newer areas of cooperation. The India–EU Roadmap also specifically highlights the need to build cooperation on data protection and regulation. Additionally, green investment and green infrastructure building are the need of the hour, and the EU can be an important partner to India as Brussels can further its energy relations with India by providing resources, technical know-how, and capabilities in the renewable energy sector. The recent months affirm the strategic importance of strengthening the strategic relationship between New Delhi and Brussels especially in the context of the Indo–Pacific region where India is a regional actor and the EU attempts at gaining a greater stake in the region. The last 60 years have offered minor yet promising glimpses of bilateral ties between India and the EU. However, the COVID-19 pandemic aided by other geopolitical challenges now offers both an opportunity to actualise and harness the true potential in this Indo–European relations. India is a key ally for Europe particularly in the context of China, however, Europe must avoid looking at India as only an alternate to Beijing. The timing seems propitious for India and the EU to renegotiate the trade deal and trust each other not only to promote rules-based multilateral order in the Indo–Pacific but also to achieve other strategic ambitions, which for decades has only been strong in rhetoric and weaker in implementation.

The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.

Contributor

B. Rahul Kamath

B. Rahul Kamath

Rahul Kamath was a Research Assistant with ORFs Strategic Studies Programme.

Read More +