News about Prime Minister Narendra Modi’s visit to Brussels for the India-EU Summit on March 30, 2016 has been greeted with satisfaction and anticipation as it comes after a long gap of four years. The long hiatus is indicative of disarray that has beset bilateral ties in recent years.
Strategic Partnership between India and EU was established in 2004, four years after the decision to hold Annual Summits in 2000. There was considerable enthusiasm when this visionary document was concluded. It was followed by a Joint Action Plan in 2005 and the launch of negotiations for India-EU Bilateral Trade and Investment Agreement (BTIA) in 2007. India had then set a target of two years to complete negotiations. It was felt that this was an ambitious target, but it was considered that it was better to be aspirational rather than diffident. No one had visualised that talks would drag on for 9 long years with no end in sight.
In this scenario, Modi’s visit to Brussels will impart fresh impetus to the BTIA negotiations as well as the whole gamut of bilateral relations in political, security, strategic and developmental areas.
Strategic Partnership has not only failed to realise the promise that was initially visualised but also continued to lose momentum over last several years, particularly since 2009. EU has been plagued by international financial crisis followed by Eurozone debt crisis in Iceland, Greece, Ireland and Portugal. Other developments on the international scene like “Arab Spring’’, conflict in Ukraine, rise of Islamic State (IS) and refugee influx from Middle East and North Africa etc have induced paralysis in its decision making.
India was riddled with scams like 2G, CWG, Coalgate etc, inability of the government to take decisions or fresh initiatives, rapid decline in economic growth to sub 5% levels in 2013. This was responsible for lack of focus on bilateral engagement with EU during UPA II rule.
Contrary to expectations, relations did not witness revival even after the NDA government came to power. Modi met outgoing EU President Van Rompuy at G20 Summit in Brisbane in November 2014. He also met Presidents of European Commission and European Council, Jean-Claude Juncker and Donald Tusk at G20 Summit in Turkey in November last year.
Modi's proposed visit to Brussels in April, 2015 did not materialise because of the delay in getting a response from the EU due to reported objections by Federica Mogherini, the EU Foreign and Security Chief. Mogherini was the Foreign Minister of Italy before moving to Brussels and was against receiving Modi because of the ongoing case against two Italian marines for shooting down two Indian fishermen off Kerala Coast in February 2012. The way was, however, cleared for restoration of normal bilateral relations after the UN Panel to which Italy had appealed asked India in August last year to suspend trial of the two marines.
The most important item on agenda during Modi’s visit will be an expeditious conclusion of talks on bilateral free trade pact. Discussions on BTIA were to resume in August last year but were called off by India at the last minute due to the arbitrary and unjustified action of EU in imposing a ban on the sale of around 700 pharma products because of the alleged manipulation of clinical trials conducted by the Indian pharmaceutical research company GVK Biosciences. India protested because most of these drugs have been in the market for many years 'without any adverse pharmaco-vigilance report from any member state'.
EU was India’s largest trading partner while India was EU’s 9th largest trading partner in 2014. Total bilateral trade (in both goods and services) during 2014 was € 95.51 billion (goods €72.52 billion and services €22.99 billion). India’s exports were € 48.21 billion and imports € 47.33 billion. Trade during the first nine months of 2015stood at €58.9 billion, comprising exports of €30.3 billion and imports of €28.6 billion. Share of India’s trade with EU has been consistently declining since 1996-97. Moreover the growth of India-EU trade has been considerably slower than overall growth of India’s trade.
EU is one of India's largest sources of Foreign Direct Investment (FDI) with inflows valued at €5billion in 2014.
After 16 rounds of talks, last being in 2013, negotiations on BTIA are currently stranded in disputes over EU demands to raise equity cap on FDI in India's insurance sector, reducing tariffs on imports of automobiles and auto-components, lowering barriers on imports of wines and spirits, protection of intellectual property rights (IPR) etc.
India seeks greater access for its services sector. It is concerned that the EU demand for stricter implementation of IPR rules might affect its generic pharma industry or force it to amend its patent law. India is also concerned at recent move by UK to hike visa fees for skilled professionals and increase in minimum salary threshold for intra-company transfers.
India's demand for granting ‘’data secure status’’ by EU and incorporation of an investment protection clause in FTA need to be resolved amicably.
Differences are expected to be narrowed during the visit and negotiators mandated to conclude negotiations quickly.
Recently India has unilaterally undertaken several reforms such as allowing 49% foreign investment in insurance and pension, easing of foreign investment norms in banking, defence and railways sectors. It has allowed 100% FDI in telecom and single-brand retail, and even 51 % in multi-brand retail.
After signing of Trans Pacific Partnership Agreement recently, it is imperative for India and EU to conclude negotiations on BTIA expeditiously.
India is fastest growing emerging economy with GDP growth of 7.6% in the current year which is expected to expand further in coming years. India has launched several significant initiatives like Make in India, Smart Cities, Digital India, Skill India etc which should be of considerable interest to EU.
To provide heft to strategic partnership, it is essential to further enhance collaboration in areas of common interest viz counter-terrorism, science and technology, climate change, education, green technology, clean energy, research and innovation, maritime security, Afghanistan, capacity development, etc..
The Summit can be expected to bring India-EU ties into sharp focus and imbue them with renewed dynamism.
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Amb. Ashok Sajjanhar has worked for the Indian Foreign Service for over three decades. He was the ambassador of India to Kazakhstan Sweden and Latvia ...
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