Author : Harsh V. Pant

Expert Speak Raisina Debates
Published on Jul 14, 2020
India, the EU and a changing global order

The 15th India-European Union Summit is finally scheduled to take place this week on 15 July via video conference and will be co-chaired by Prime Minister Narendra Modi, President of the European Council Charles Michel and President of the European Commission Ursula von der Leyen. It was supposed to take place earlier this year in March but had to be postponed due to the Covid-19 pandemic.

As the world continues to grapple with the challenges posed by the ongoing pandemic, the top leadership of India and the EU is expected to discuss global cooperation and solidarity to protect lives, mitigate socio-economic consequences and strengthen preparedness and response capacities. At a time when the US is consumed with internal matters and seems to be withdrawing from its leadership role in global affairs, there’s a political vacuum being created in international relations. The EU and India will be endeavouring to strengthen multilateralism given their firm belief in its central role in international relations, something that the two had underscored in a virtual meeting of the Alliance for Multilateralism in June.

Strategic partnership between India and the EU is governed by the 1994 EU-India Cooperation Agreement. The EU is India’s largest trading partner, accounting for trade in goods worth 80 billion euros in 2019, on par with the US and ahead of China. According to the European Parliament’s South Asia factsheet for November 2019, “trade in goods between the EU and India was estimated at EUR 90 billion in 2018, with a surplus of around EUR 2 billion in India’s favour. The EU is also one of India’s most important sources of investment, with EUR 76.7 billion in outward stocks and EUR 11 billion in inward stocks in 2017.” India currently benefits from unilateral preferential tariffs under the EU Generalised Scheme of Preferences (GSP) which links unilateral trade preferences to respect for human and labour rights. There are more than 6,000 EU companies present in India, providing direct and indirect employment to over six million people.

"Strategic partnership between India and the EU is governed by the 1994 EU-India Cooperation Agreement. The EU is India’s largest trading partner, accounting for trade in goods worth 80 billion euros in 2019, on par with the US and ahead of China"

However, bilateral and investment ties got strained when New Delhi refused to resume stalled negotiations with Brussels on the proposed India-EU free trade agreement (FTA), officially called the Broad-based Trade and Investment Agreement (BTIA), that began in 2007. In 2016, New Delhi overhauled the existing treaties with EU member-nations and came up with a new model Bilateral Investment Treaty (BIT) text. The EU has refused to negotiate with India on the new model text. Also, Indian and the EU have got involved in a bitter trade dispute at the World Trade Organization. The EU has dragged India to the WTO’s dispute settlement body for hiking import tariffs ranging from 7.5 percent to 20 percent, on a number of Information and Communication Technology (ICT) products. Union Minister for Commerce and Industry Piyush Goyal has indicated that India is willing to have a preferential trade agreement (PTA) with the EU. Hopefully, the summit will give this process a new momentum.

The urgent need for investment protection is underscored by the evolving shift whereby global supply chains are getting disrupted with decline in trade, manufacturing and exports amid a growing tendency of nations to move towards protectionism to protect the domestic industries. India and the EU should endeavour to promote effective multilateralism and a rules-based trading order with the World Trade Organisation given their convergent interests in this realm.

"India and the EU should endeavour to promote effective multilateralism and a rules-based trading order with the World Trade Organisation given their convergent interests in this realm."

In terms of security cooperation, India and the EU are moving ahead as both are working to bring further stability to regions of common interest like the Indian Ocean Region. Maritime security is a key priority for both and greater military to military engagement is going to be crucial for the operationalisation of ideas that have been discussed for far too long. Both are increasingly sharing best practices and experiences with one another leading to capacity development, intelligence sharing and better counter-terrorism programmes.

India and the EU are deeply committed to achieve Sustainable Development Goals (SDGs) by 2030 and the commitment for clean energy, energy efficiency and climate action can be seen in EU-India Clean Energy and Climate Partnership (CECP) (2016). Since COP-25 delivered mixed results both India and EU should endeavour full implementation of the Paris Agreement worldwide and together promote the use of renewable energy. In the area of digital economy and governance, both are committed to open access policies and are firm believers in free flow of information and data without any barriers or restrictions for the benefit of all. Furthermore, the EU-India Agenda for Action 2020 that was proposed in 2016 needs to be revised and a new action plan for 2025 should be prioritized based on joint priority areas for a more constructive strategic partnership.

The summit comes at a time when tensions are rising between India and China even as the EU-China summit in June saw the two sides diverging openly. Not only did they fail to come up with a joint statement but the EU also stated that “we have to recognise that we do not share the same values, political systems, or approach to multilateralism.” After decades of prioritising ties with China over India, there is now a recognition within the EU that ties with New Delhi should be nurtured more substantively. The 2018 EU strategy on India underscores this transformation with the EU not only welcoming India’s growing role on the global stage but also making its intent clear to work with India towards strengthening the rules based global order.

"The 2018 EU strategy on India underscores this transformation with the EU not only welcoming India’s growing role on the global stage but also making its intent clear to work with India towards strengthening the rules based global order"

This summit will be an opportunity for both sides to strengthen and expand this partnership based on shared principles and values of democracy, freedom and rule of law. And with a voracious China intent on challenging the very foundations of the extant global order, the stakes for New Delhi and Brussels could not be higher.

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Author

Harsh V. Pant

Harsh V. Pant

Professor Harsh V. Pant is Vice President – Studies and Foreign Policy at Observer Research Foundation, New Delhi. He is a Professor of International Relations ...

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