India European Union Relations

India European Union Relations

This article deals with ‘India European Union Relations.’ This is part of our series on ‘International Relations’ which is important pillar of GS-2 syllabus . For more articles , you can click here

Why is Europe  important to India

  • It is linked to colonial legacy of India
  • Ties coloured by outlook of western educated leaders =>  eg Nehru, Gandhi etc educated in Britain 
  • Britain has special place due to Indian Diaspora
  • India can learn art of multilateralism from EU
  • Natural partners because of shared values & beliefs in democracy, pluralism , independent media & rule of law

Trade Relations

  • One of the largest trading partner. Accounts for €86 billion in 2017 ie 13% of India’s overall trade. 
  • Despite global turmoil , bilateral trade in goods increased  
  • EU is the second largest investor in India, with €70 billion of cumulative FDI from 2000
  • Free Trade Agreement (FTA) currently under negotiation => would be world’s largest encompassing 1.8 billion people
  • But problems are present due to the fact that European markets are going towards protectionism .

Security

  • India and Europe share common interest on
    • Defending global terrorism & extremism
    • securing trade lines from attacks of pirates
    • Preventing attacks on IT infra
  • Helpful in securing Indian Ocean Region because it’s members like France, Italy etc have important bases
    • France : Reunion Island , UAE etc
    • Italy : Djibouti

World Order

  • Commitment to a “rules-based” international order and a “multipolar” world.
  • For UNSC Reforms, EU is most important because of Veto Power of France

Climate Change & Environment

  • Both shares common view towards Climate Change
  • After US withdrawal , India – EU Cooperation has become even more important

City to City Cooperation

City-to-city cooperation between European and Indian cities such as Mumbai, Pune and Chandigarh

Challenges

  • Increasing Wave of  Protectionism in EU countries
  • In WTO, both are leaders of Opposite Blocs  wrt Doha Development Agenda
  • On Bilateral Investment Treaty (discussed below)
  • Indian Agro Products banned on frivolous pretexts under SPS measures of WTO
  • Problems wrt Labour Laws – Eg : Carpets denied entry due to Carpet Industry of Mirzapur employing child labour

 Broad-based Trade & Investment Agreement (BTIA)

Both parties initiated negotiations on a Free Trade Agreement (FTA) called the Broad-based Trade and Investment Agreement(BTIA) in 2007 but have not reached conclusion till now

Roadblocks wrt EU

  • India’s model BIT (Bilateral Investment Treaty)  which allows companies to seek international arbitration only when all domestic options have been exhausted 
  • Data Secure Status of India :   EU refused  to  grant  the  status  of  Data  Secure  Nation to India.  It will  increase operating  costs  and  affect  competitiveness.
  • India’s  IPR Regime   with  the  provision  of  compulsory  licensing 
  • Issues such as : Vodafone Case and Retrospective taxation 
  • EU wants India to reduce taxes on liquor (which would benefit France) and automobiles (which would benefit Germany)
  • Duty and  tariff  protection  in  areas  of   spirits, wine  and  dairy  products

Roadblocks wrt  India

Concerns  in  agri  Sector: 

  • EU  subsidises  dairy  products.  Concern of dumping Indian markets with European Dairy products
  • Europe use SPS Measures clause to block access of Indian Agri products in Europe

Concerns  in  service  sector: 

  • Relaxation in movement  of  skilled  professionals into  EU.
  • Recognition  of India’s  professional  qualifications  in  EU  

Procurement Policy

  • EU wants that government procurement chapter to be added in the FTA so that it can capture the lucrative government procurements. 

Post Brexit Opportunities

After Brexit, it could be easier for India to negotiate the terms of FTA with EU. Till now UK was playing role of biggest spoiler

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