UPSC 2023 countdown has begun! Get your personal guidance plan now! (Click here)

Context

• President of the European Commission Ursula Von Der Leyen was on two–day official visit to India.
• She has heaped all praises for the robustness of Indian democracy. She went on to say that ‘World Watches When Indians Cast Their Vote’.
• Both sides are expected to review the progress on various aspects of the relationship and further intensify the multifaceted partnership with EU.

About European Union (EU)

• The EU is a political and economic union of 27 member states that are located primarily in Europe.
• The union and EU citizenship were established when the Maastricht Treaty came into force in 1993.
• The EU grew out of a desire to strengthen international economic and political co-operation on the European continent in the wake of World War II.
• It has often been described as a sui generis political entity (without precedent or comparison) with the characteristics of either a federation or confederation.
• The eurozone consists of all countries that use the euro as official currency. All EU members pledge to convert to the euro, but only 19 have done so as of 2022.

Members of the EU

• Through successive enlargements, the European Union has grown from the six founding states (Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands) to 27 members.
• This entails a partial delegation of sovereignty to the institutions in return for representation within those institutions, a practice often referred to as “pooling of sovereignty“.
• In the 2016 ‘Brexit’ referendum, the UK voted to leave the EU. The UK officially left the EU in 2020

India-EU Relations: A Backgrounder

• It’s been 60 years since India accredited its first ambassador to the European Economic Community (EEC), the organisation that served as embryo for the European Union.
• Back then, India was a protectionist economy trying to move away from the British colonial era while the EEC consisted of just six European countries.
• Today, the relations between the EU and India are defined by the 1994 EU–India Cooperation Agreement.
• India and the EU became “Strategic Partners” in 2004.

[A] Political Partnership

• The Joint Political Statement signed in 1993, opened the way for annual ministerial meetings and a broad political dialogue.
• The Cooperation Agreement signed in 1994 took the bilateral relationship beyond trade and economic cooperation.
• A multi-tiered institutional architecture of cooperation has since been created, presided over by the India-EU Summit since 2000.
• Today EU stands as a major reference for India’s legislative process in the field of Data security and privacy.

[B] Economic Ties

• Bilateral trade: The EU is India’s largest trading partner, while India is the EU’s 9^th largest trading partner. It is the second-largest destination for Indian exports after the United States.
• Investment: The EU’s share in foreign investment inflows to India has more than doubled from 8% to 18% in the last decade. This makes the EU an important foreign investor in India.
• Preferential treatment: India is the benefactor of the unilateral preferential tariffs under the EU Generalised Scheme of Preferences (GSP).
• Energy: Both sides have finalised civil nuclear cooperation agreement after 13 years of negotiations called as the European Atomic Energy Community (EURATOM). It involves collaboration in the civil nuclear energy sector.
• Development cooperation: Over €150 million worth of projects by EU are currently ongoing in India. European Investment Bank (EIB) is providing loans for Lucknow, Bangalore, and Pune Metro Projects.

[C] Defence & Security

• EU and India have instituted several mechanisms for greater cooperation on pressing security challenges like counterterrorism, maritime security, and nuclear non-proliferation.
• Information Fusion Centre – Indian Ocean Region in New Delhi (IFC-IOR) has recently been linked-up with the Maritime Security Centre – Horn of Africa (MSC-HOA) established by the EU Naval Force (NAVFOR).

 [D] Climate Change

• EU and India also underline their highest political commitment to the effective implementation of the Paris Agreement and the UNFCCC despite US withdrawing from the same.
• India-EU Clean Energy and Climate Partnership was agreed at the 2016 Summit – to promote access to and disseminate clean energy and climate friendly technologies and encourage R&D.
• Energy cooperation is now ongoing on a broad range of energy issues, like smart grids, energy efficiency, offshore wind and solar infrastructure, and research and innovation.
• EU and India also cooperate closely on the Clean Ganga initiative and deal with other water-related challenges in coordinated manner.

[E] Research and Development

• India-EU Science & Technology Steering Committee meets annually to review scientific cooperation.
• Both have official mechanisms in fields such as Digital Communications, 5G technology, Biotechnology, artificial intelligence etc.
• ISRO has a long-standing cooperation with the European Union, since 1970s. It has contributed towards the EU’s satellite navigation system Galileo.

Major limitations to the ties

• Deadlock over BTIA: The negotiations for a Broad-based Bilateral Trade and Investment Agreement (BTIA) were held between 2007 to 2013 but have remained dormant/suspended since then.
• Export hurdles: Indian demands for ‘Data secure’ status (important for India’s IT sector) to ease norms on temporary movement of skilled workers, relaxation of Sanitary and Phytosanitary (SPS), etc. stands largely ignored.
• Trade imbalance: This heavily leans towards China. India accounts for only 1.9% of EU total trade in goods in 2019, well behind China (13.8%).
• Brexit altercations: In the longer term of balancing of global powers, a smaller Europe without the key military and economic force UK, is much weaker in the wake of an ambitious China and an increasingly protectionist US.
• EU primarily remains a trade bloc: This has resulted in a lack of substantive agreements on matters such as regional security and connectivity.
• Undue references to sovereign concerns: The European Parliament was critical of both the Indian government’s decision to scrap Jammu and Kashmir’s special status in 2019 and the Citizenship (Amendment) Act.
• China’s influence: EU’s affinity lies with China. This is because of its high dependence on the Chinese market. It is a major partner in China’s Belt and Road Initiative (BRI).
• Ukrainian war: EAM S. Jaishankar’s witty reply about EU’s oil import from Russia has not been welcomed across the EU. It still expects India to criticize Russia.

EU’s interests in India

• Reducing dependence on China: It is necessary for both sides as it is making them highly vulnerable to Chinese aggression.
• Western lobby: EU acknowledges its supply chain’s vulnerability, the risk posed by overdependence on China, and the need to strengthen the global community of democracies.
• Healthcare: The on-going pandemic has shown the need for cooperation in global health. India and the EU have called for a reform of the World Health Organisation (WHO).
• Perception of India as a huge market: EU still largely perceives India as huge market rather than a partner.
• Promotion of multilateralism: Both sides are facing issues related to US-China trade war and uncertainty of the US’ policies. They have common interest in avoiding a bipolarised world and developing a rules-based order.

India’s stakes in EU

• Global leadership vacuum: Retreat of the U.S. from global leadership has provided opportunities for EU- India cooperation and trilateral dialogues with countries in the Middle Fast, Central Asia, and Africa.
• Chinese Aggression: China’s increasing presence in Eurasia and South Asia is creating similar security, political and economic concerns for Europe and India.
• Fall of the conventional global order: Trade war, crumbling WTO and break down of TPP etc. has made EU understand the economic importance of India.
• BREXIT: Brexit is pushing India to look for new ‘gateways’ to Europe, as its traditional partner leaves the union. A renewed trade and political cooperation are the need of the hour.
• Conformity over Indo-Pacific: The Indo-Pacific is the main conduit for global trade and energy flows. Rule-based Indo-pacific is of everyone’s interest with EU no exception.

Way forward

• A close bilateral relation between India and the EU has far-reaching economic, political and strategic implications on the crisis-driven international order.
• Both sides should realise this potential and must further the growth of the bilateral ties with a strong political will.
• As highlighted by EU strategy on India 2018, India-EU should take their relations beyond “trade lens”, recognizing their important geopolitical, strategic convergences.
• India can pursue EU countries to engage in Indo-pacific narrative, geo-economically if not from security prism.