These are busy times for Asian leaders — and Indian Prime Minister Narendra Modi is among the busiest.
Last week as he criss-crossed Asia, clinching business deals, attracting much-needed investments and building strategic alliances, Modi found time for a quick meeting with the European Union’s outgoing European Council President Herman Van Rompuy to underline that the “EU should take advantage of the new economic environment in India”.
The two men apparently agreed that the United Nations should hold an annual international “Yoga Day”.
But not much was apparently said on the EU-India free trade agreement that the two sides have been trying to negotiate for the last seven years and which now seems to have run into the ground.
EU officials are still hoping that the negotiations will be back on track soon. But the Indian leader is too busy looking elsewhere.
As of this autumn, Modi has his nation and the rest of Asia abuzz with his determination to inject new life into India’s “Look East” policy which, following his incessant Asian travels, including recent talks with Asean (Association of South-East Asian Nations) and other Asian leaders in Myanmar, has morphed into what Modi proudly describes as a “Look East — and Act East” policy.
India’s decision to step up its game in Asia is no surprise. As an emerging power with “great power” ambitions, India has no option but to seek a stronger role in a volatile neighbourhood and a region marked by often-changing geopolitical rivalries and alliances. Also, tapping into the region’s dynamic economies is critical for India’s own growth and reform agenda.
Certainly, China has the funds needed to help finance India’s infrastructure requirements while Japan and South Korea have the technical experience and expertise. South-east Asian markets are important for Indian investors and exporters. Sustainable peace with Pakistan may still be a long way off but is essential for India’s development and peace and stability in the region.
While in Myanmar, Modi made the headlines by pushing his “Make in India” campaign, which aims to turn the country into a global manufacturing hub, by cutting red tape, upgrading infrastructure and making it easier for companies to do business. Modi promised to implement long-delayed plans to boost trade and deepen ties with Asean so that current trade flows could rise from $75 billion today to $100 billion by 2015.
In fact, the policy is not new. India has long spoken of developing a “Look East” policy, but has lagged behind China in forging ties with emerging economies in South-East Asia. Tackling China’s influence on Asean and South Asia is still a challenge but India benefits from the fact that Japan, Asean and others in the region are certainly looking to reduce their economic dependence on Beijing by reaching out to Delhi.
Indian commentators also underline that Modi used the Asean meeting to articulate for the first time India’s intent to enhance “balance” in the Asia Pacific region, arguing that the word was carefully chosen to reflect India’s shared concerns with other Asian countries about China’s growing assertiveness in the region.
Interestingly, Indian defence cooperation is being stepped up with several Indian Ocean states including Sri Lanka and Maldives. India will supply four naval patrol vessels to Hanoi as part of $100 million Line of Credit signed last month. The two countries have also decided to ramp up cooperation in the field of hydrocarbon, civil nuclear energy and space.
Given Modi’s focus on the Asia-Pacific, the EU’s new leaders may have to wait a long time before he signals a real interest in upgrading bilateral ties.
It is no secret that the EU-India strategic partnership needs a shot in the arm and that trade and investment flows are much too modest. But negotiations for an India-EU Bilateral Trade and Investment Agreement (BTIA) — the most important issue on the bilateral agenda — have lasted for seven years, with no end in sight. And hopes that New Delhi would put energy and effort into the successful conclusion of the elusive deal have not materialised, with differences over tariffs and market access as well as questions related to the protection of intellectual property rights continuing to impede progress.
The pact could be signed in 2015 — but only if both sides can summon up the political will to look beyond the array of technical issues to the deeper strategic importance of their relations.
Modi and the EU’s new leaders face the uphill task of taking the relationship to a higher and more genuinely strategic level, a move that would benefit both sides.
In addition to the geopolitical value of such a decision, European investors are willing and eager to enter the Indian market. European know-how could be valuable to India’s reform and modernisation agenda. Europe, meanwhile, needs new markets to keep its modest economy on track.
To inject momentum into the relationship, both sides will need to make an effort. EU and Indian leaders have not met for summit talks since February 2012. An early meeting between Modi and the EU’s new presidents of the European Commission and the EU Council this autumn will therefore be crucial in signalling a fresh start in relations.