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EU-India Seminar

20 September 2018

EU-India Seminar 

In advance of an EU communication on EU-India relations, the EEAS organised a track 1.5 seminar this week on how to move the relationship forward.

There was broad agreement among the officials and experts from both sides that the EU has not focused as much on India as on other strategic partners in Asia, notably China. But there is a broad agenda on which the two sides can cooperate, notably on on India’s modernisation agenda and on regional security.

The main problem is the poor performance on the trade front. India is the tenth trading partner of the EU taking just 2.5% of EU exports compared to over 10 %  for China. The EU has invested some 73bn euros in India but over 178bn in China. The main components of two-way trade are cars, IT, food and energy. EIB increasing lending to India. India is now increasing its investment in the EU.

There is some cooperation on regulatory issues but negotiations on an FTA, started almost a decade ago, are still stuck largely on restrictions on market access. The EU claims that India remains highly protectionist, especially in the services, food and beverage sectors. It also points to the lack of a proper internal market in India and differences on how to transform and modernise economies. India responds that the EU is also protectionist and should show more understanding for the wide economic disparities in India. It also wants a more flexible EU approach to labour mobility, a key issue for India.

Given the threat to the WTO from the US, the EU hopes that the logjam with India can be broken but hopes are not high. There is talk of a separate bilateral investment treaty but both sides would still prefer to deal with this within the overall framework of an FTA.

Despite the threat to the WTO, India does not seem to share the EU’s sense of urgency. The economy is doing well, growing at 8% a year, and it seems there will be no new mandate to move the negotiations forward until after the India elections next year. 

Perhaps the biggest scope for cooperation is in the modernisation agenda. Although there are some differences on how to transform economies, both sides are keen to cooperate on alternative energy, urbanisation, artificial intelligence, education and environmental protection. 

Cooperation on foreign policy is also picking up although traditionally India prefers to work with the larger member states on security issues. Due to its historic ties, the UK maintains a special position with India which will be tested as a result of Brexit.

India views China as its main rival and Russia as an old friend. Under Modi there has been a deepening of relations with Japan, the US and Australia – a grouping known as the Quad when it comes to the Indo-Pacific region. Exchanging views on China would seem an obvious agenda item. India feels slighted that it has not received support from the EU on its aim of a permanent seat on the UNSC. It is an active member of the G20 and BRICS, and has recently joined the SCO as an observer. It has also taken a different view from the EU of Russia’s actions in Ukraine and the ethnic cleansing carried out by the Myanmar. Despite being the largest democracy in the world it does not share the EU’s zeal to promote democracy and human rights everywhere. 

But there is growing EU-India cooperation on terrorism, cyber and maritime security. The two sides are also exchanging views on how to maintain the Iran deal in the face of US sanctions. Afghanistan and space are further areas of cooperation. 

Parliamentary contacts are few and both sides want to increase relations between lawmakers.

The conclusion was that the relationship had much potential but it would need considerable political will to achieve a real breakthrough.