In economic terms, the EU should matter a lot more

Prime Minister Narendra Modi has rightly chosen South Asia, Japan, China, and the US for his initial foreign policy initiatives. It is becoming clear that development and investment issues were the focus of his interactions with leaders from these countries. In this regard, Europe too should be at the top of his agenda.

With more than $130 billion trade in goods and services, the European Union (EU) is India’s biggest trading partner. In the last decade, foreign direct investment in India from EU countries has been higher than investments from the US and Japan combined. Besides, Europe is becoming an important destination for cross-border investments and overseas acquisitions for Indian companies. A recent study by the Europe India Chamber of Commerce shows that Indian companies have invested $56 billion in Europe since 2003. A close look at the number of technical and financial collaborations signed by Indian companies shows their preference for Europe over other regions. So if the economy is now the driving force of Indian foreign policy, then Europe should clearly be one of our main priorities.

In the last two decades, rising India’s global vision of democratic, multicultural and multi-polar world has somehow coincided with Europe. Similarly, when the new economic and security architecture was evolving in Asia, European policy-makers concluded that their engagement with Asia would be incomplete without partnering with India. Realising the importance, both signed the India-EU Strategic Partnership in 2004 and the Joint Action Plan in 2005. Encouraged by positive economic trends, both started negotiations for a Broad-based Trade and Investment Agreement (BTIA) in 2007 which have still not concluded. The recurring postponement of the conclusion of trade talks has become a regular feature of India-EU Summits. At the 12th summit in February 2012, both sides could only declare that negotiations on the trade deal are “close to completion.” Since then we have not even held the summit which we were holding more or less regularly every year since 2000.

The reason perhaps is that many in India remain sceptical about Europe’s role in global affairs. The EU is hardly a factor in India’s foreign policy debates. Because of the deadlock in India-EU BTIA negotiations and the crisis in some of the Eurozone economies, Europe has somehow slipped from our imagination.

As there is a new leadership at the helm of affairs both in India and the EU, this is the right moment to rejuvenate India-EU relations. The former Luxembourg Prime Minister Jean-Claude Juncker’s team is going to take over the European Commission soon. Similarly, the former Polish Prime Minister Donald Tusk will take over as the new European Council president in December.

To re-energise these relations, we must finalise negotiations on the BTIA wherever possible. Areas where agreement is still not possible could be finalised later.

There must be something concrete to show at the next summit early next year. Any agreement, even if it is not comprehensive, would be a good showcase for the new leadership, both in India and in the EU. Still, if no agreement is possible, we should not hold India-EU ties hostage to the BTIA.

After taking stock of existing bilateral dialogues constituted under a joint action plan, we may need to concentrate on a few. Some of them could be easily weeded out. Something concrete can come out from the energy dialogue. Despite different levels of development, both India and Europe are facing some similar challenges related to their energy security. Despite some common challenges and tremendous opportunity to work together, there is a perception that EU and India somehow have diametrically opposite views on global norms concerning energy security and environment. So the major challenge is to change this perception. We may also start some new dialogues on Afghanistan, Africa, West Asia and development cooperation.

Gulshan Sachdeva is chairperson, Centre for European Studies, JNU and currently holds the ICCR Chair on Contemporary India at the University of Leuven, Belgium.
The views expressed by the author are personal.