India European-Union Relations
This article deals with ‘India European-Union Relations.’ This is part of our series on ‘International Relations’, which is an important pillar of the GS-2 syllabus. For more articles, you can click here.
Why is Europe important to India?
- Europe is linked to India’s colonial legacy, as India was a colony of Britain.
- Ties are also coloured by the outlook of educated western leaders like JL Nehru, Gandhi etc.
- Britain has a special place in Indian foreign policy due to the large Indian Diaspora in Britain.
- India can learn the art of multilateralism from European Union. EU can act as a model for creating the SAARC Custom Union.
- India and the European Union are ‘natural partners’ because of their shared values & beliefs in democracy, pluralism, independent media & the rule of law.
Various aspects of India-EU Relations
1. Trade Relations
- The European Union is one of the largest trading partners of India. The bilateral trade accounts for $116.4 billion in 2021.
- European Union is the second largest investor in India, with a cumulative FDI of €70 billion from 2000.
- Free Trade Agreement (FTA) between India and European Union is currently under negotiation. When signed, it would be the world’s largest encompassing 1.8 billion people.
- But problems are present because European markets are going towards protectionism.
2. Security Relations
- India and Europe share a common interest on
- Defending global terrorism & extremism
- Securing trade lines from attacks by pirates
- Preventing attacks on IT infrastructure
- The relation will be helpful in securing Indian Ocean Region because its members, like France, Italy etc., have important bases.
- France: Reunion Island and UAE
- Italy: Djibouti
3. Maintain the World Order
- India and European Union have a commitment to a “rules-based” international order and a “multipolar” world.
- For UNSC Reforms, the EU is most important because of the Veto Power of France.
4. Climate Change & Environment
- Both shares a common view toward Climate Change
- After the withdrawal of the UK from the European Union, India-EU Cooperation has become even more important.
5. City to City Cooperation
- There is a city-to-city cooperation between European and Indian cities such as Mumbai, Pune and Chandigarh
6. New opportunities
- Assertive China and its challenge to the existing balance of power is forcing the European Union & India to work jointly.
- Post-Brexit, India has deepened its relationship with the European Union. Earlier, all the EU trade with India was routed through London.
- The increasing wave of Protectionism in the European Union countries.
- In WTO, both are leaders of Opposite Blocs wrt the Doha Development Agenda.
- Issues wrt Bilateral Investment Treaty (BIT) (discussed below)
- Indian agro-products are banned from entering the EU on frivolous pretexts under SPS measures of the WTO.
- Labour Issues: There are problems wrt Labour Laws in India. E.g., Indian Carpets denied entry on the pretext that the carpet industry of Mirzapur employs child labour.
- Human Rights issue: EU members have expressed concerns regarding the deteriorating human rights situation in India.
India-EU FTA or 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 a conclusion till now.
Concerns raised by EU
- India’s model BIT (Bilateral Investment Treaty): The Model Treaty allows companies to seek international arbitration only when all domestic options have been exhausted.
- Data Secure Status of India: EU has refused to grant the status of Data Secure Nation to India. Hence, 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 provided by the Indian government to domestic producers of spirit, wine and dairy products
Concerns raised by India
1. Concerns in Agriculture Sector:
- EU subsidises its dairy products. Hence, there is a concern about dumping Indian markets with European Dairy products.
- Europe uses the SPS Measures clause of WTO to block access to Indian Agri products in Europe.
2. Concerns in the service sector:
- India demands relaxation in the movement of skilled professionals into the EU.
- Indian government wants recognition of India’s professional qualifications in the EU.
3. Procurement Policy
- EU wants the government procurement chapter to be added to the FTA so that it can capture the lucrative government procurements.
After Brexit, it could be easier for India to negotiate the terms of the FTA with the EU. Till now, the UK was playing the role of the most prominent spoiler.