It has taken one year, but Indian Prime Minister Narendra Modi has finally signalled an interest in reviving ties with the European Union. And the EU is ready to reciprocate, albeit cautiously.
India has in fact long been the big gap in the EU’s outreach to Asia. While India and the EU declared that they were strategic partners some years ago, the relationship has never really taken off.
Indians complained the EU was distracted by problems at home and its focus on China. Europeans said India was too mesmerised by the US to pay attention to Europe. Contacts between the two sides were desultory, slow-moving and lacklustre.
Finally, after a year-long wait, it looks like this could change. Whether it is his “Make in India” campaign or plans for “Digital India” and “smart cities”, Modi knows he needs European know-how and money. Europe, for its part, is eager to be involved in the massive overhaul of the Indian economic system that the prime minister is promising.
Modi’s warm embrace of foreign partners could soon therefore also extend to the EU and not just national European governments. To make the Delhi-Brussels rapprochement sustainable, action is required in some important areas.
First, after a year of little or no high-level contact, Delhi and Brussels must resume negotiations on the much delayed Bilateral Trade and Investment Agreement (BTIA), a comprehensive deal covering all areas in goods, services and public procurement in both markets. Once signed, the agreement could act as an important launching pad for increased European investments in India.
Second, India’s new economic programme opens up fresh avenues for increased EU-India alliance which go beyond the two sides’ traditional interaction. This could include cooperation in areas where both sides have a strong economic interest such as infrastructure investments, sustainable urbanisation, innovation and synergies between “Digital India” and the EU’s agenda for a Digital Single Market.
Third and most importantly, there are hopes that EU and Indian leaders could meet for summit talks, possibly in November this year to coincide with the G20 summit in Antalya, Turkey. With no bilateral summit held over the last three years — the last such gathering was in February 2012 in Delhi — the EU-India relationship is in desperate need of renewed political direction to give it a new lease of life.
Both sides agree that EU-India relations need to be broadened to include a “beyond-trade” agenda — and that Modi’s wide-ranging modernisation programme offers ample opportunities for such new synergies. Realistically, however, a quick relaunch of the stalled BTIA negotiations is required to get the relationship back on a constructive track and for discussions to begin in new areas.
This may now happen. EU Trade Commissioner Cecilia Malmström and Indian Commerce Minister Nirmala Sitharaman, who met on the margins of an OECD meeting in Paris on June 4, have agreed to restart the BTIA talks as soon as possible. Contacts are expected to resume soon, leading to cautious hopes that the deal — eight years in the making — will finally be clinched early next year.
The EU has made clear that it is targeting the emerging well-off Indian middle class for enhanced market access in automobiles, wines and spirits, and cheese. Brussels is also calling for reform in Indian laws on intellectual property rights, trade and environment, trade and labour, and wants liberal access in insurance, banking and retail trade. India, for its part, is insisting on more labour mobility, professional work visas and recognition as a data-secure country to attract more European investments in its high-tech sector.
With two-way trade estimated at around €72.5 billion in 2014 while the EU’s investment stock in India was €34.7 billion in 2013, there is certainly ample room for improvement. But agreement on BTIA will require that both sides summon up the political will to look beyond the array of technical issues to the deeper strategic importance of their relations.
In order to get India and the EU talking to each other on these and other equally interesting topics, Modi’s can-do spirit needs to filter down to different, less adventurous echelons of the Indian bureaucracy. The European External Action Service, meanwhile, must work in tandem with the European Commission’s trade and other departments to hammer out a fresh EU-India agenda for action which looks at new areas and interests. Such an action plan should be short, snappy and action-oriented, rather than the long wish list which the EU traditionally draws up with and for its partners. Hopefully, Such a pithy document could then be approved at the EU-India summit later this year.
Above all, both sides must take a fresh look at each other. European member states have already recognised the importance of India, both as a regional actor and an influential global player. It is time the EU institutions shed their reservations and engaged with India as an increasingly powerful 21st century partner.
Equally, India should recognise that while relations with national European governments are important, the EU also has much to offer. It would be a pity if the full potential of EU-India ties were to remain untapped and unexplored for another long period.