The success of the India-EU summit comes from the decision to promote multilateralism

Given the realities of the COVID-19 world – and tensions between China and India – the 15th India-EU Summit 2020 is a significant step forward. The summit between two “unions of diversity” underscores the importance of democracy, pluralism, inclusivity, respect for international institutions, multilateralism and transparency, at a time when there are “different types of pressures on the rules-based international order.”

Co-chaired by the Prime Minister of India, Narendra Modi, the President of the European Council President, Charles Michel, and the President of the European Commission, Ursula von der Leyen, the summit emphasised the need to “strengthen global institutions” and “build a human-centric post-COVID-19 world.”

History of India-EU relations

However, beyond the rhetoric, a peek into the history of India-EU relations shows a different reality.

India is one of the first countries to have established its diplomatic engagement with the European Economic Community; diplomatic relations between India and Europe go back to the 1960s. In 1994, a co-operation agreement signed between India and the European Union – which formed the legal basis – took the bilateral relationship “beyond trade and economic co-operation.”

In June 2000, the first India-EU Summit took place in Lisbon. Four years later, in 2004, the relationship was raised to the level of ‘Strategic Partnership’ at the fifth India-EU Summit at The Hague. The next year, 2005, a Joint Action Plan to “strengthen dialogue and consultation mechanisms in the political and economic spheres, enhance trade and investment, and bring peoples and cultures together,” was put in place.

From 2000 till 2012, twelve annual summits took place between India and the EU. At these summits, the two sides discussed various issues such as anti-piracy, terrorism, cybersecurity and nuclear proliferation.

However, the thirteenth-annual summit did not take place until 2016 due to the Italian Marines case; Italy held back the EU interaction with India even at the Summit level.

The fourteenth India-EU Summit took place in 2017. However, the fifteenth India-EU summit was postponed until 2020 so that the re-elected Modi government could meet the new leadership of the EU.

Unfortunately, despite thirty bilateral fora, the relations between India and the European Union have not reached their potential. In fact, the partnership is among the most underperforming in the world today.

Trade & Investment

Let’s look at the trade and investment segment. In 2019, though the EU is India’s largest trading partner, the total trade in goods accounted for a mere 1.9 per cent. In comparison, total trade in goods between the United States accounts for a whopping 15.2 per cent while trade in goods with China accounts for over 13.8 per cent.

Similarly, in 2019, Foreign Direct Investment (FDI) into India from the EU accounted for €83 billion. Though it may seem like a substantial number, in comparison to the FDI outflows from the EU into Brazil and China, €312 billion and €175 billion respectively, the FDI inflow into India from the EU is, in relative terms, insignificant. In return, Indian companies have invested only about €50 billion in the EU.

Moreover, the EU & India have been negotiating a free trade deal – the so-called India-EU Broad Based Bilateral Trade and Investment Agreement (BTIA) negotiations – since 2007. But thanks to narrow interests on either side, not much has happened.

The automobile and wine lobbies in the EU have actively pushed against the BTIA. The EU and India suspended talks when they could not agree on crucial issues such as slashing of tariffs on automobiles, wines and spirits, and free movement of labour.

The Indian industry has also not championed the BTIA. This is because the Indian IT companies that have invested in facilities within the EU had to comply with its ad-hoc legal requirements and have no more interest in any concessions.

Consequently, the EU and India remain “far apart” on the issue of a Free Trade Agreement (FTA).

Ironically, though the EU rhetorically says it shares common values with India, it has a much larger economic participation with China. Should the EU see India as a “natural partner” with “shared values and goals,” it is incumbent on the EU to see India as a priority partner for relocation from China.

However, the EU is reportedly disappointed with recent Indian trade policies such as “Make in India” and “Atmanirbhar Bharat,” which they fear could give rise to “protectionist tendencies.” But given the increasing gaps in trade policy, both sides agreed to set up a high-level ministerial dialogue to boost trade relations.

Also, the decision to establish an India-EU Resource Efficiency and Circular Economy Partnership, though legally non-binding, is a positive step forward. In the context of COVID-19, it could play a decisive role in contributing to the implementation of the Sustainable Development Goals by minimising waste, reducing primary consumption, striving towards non-toxic material cycles and enhancing the use of secondary raw materials.

The “European Green Deal” sets out Europe’s commitment to tackle climate and environment-related challenges, to ensure that there will be no net emissions of greenhouse gases by 2050. Similarly, a shared vision for creating sustainable solutions, policies and practices could strengthen supply-chain linkages with India and lead to sustainable growth and job creation in both the blocks.

Strategic Partnership

The 15th India-EU Summit has renewed its commitment to strengthening EU-India strategic partnership. To this effect, it has come up with a roadmap for the next five years. The joint communique says:

In a complex international environment, the European Union and the Republic of India, both “unions of diversity”, sharing values of democracy, the rule of law and human rights, are equally convinced of the necessity to preserve the rules-based international order and effective multilateralism. The EU and India have a common interest in each other’s security, prosperity and sustainable development. They can contribute jointly to a safer, cleaner and more stable world. They, therefore, endeavour to develop further their Strategic Partnership, based on this roadmap.

The roadmap “reaffirms commitment” to “promote shared values of human rights and fundamental freedoms” and emphasises the need to “strengthen foreign policy and security.” It highlights the need to have tangible outcomes to counter-terrorism and radicalisation, with a particular focus on strengthening cybersecurity. To facilitate smooth co-operation, it established a working arrangement between Europol and the Central Bureau of Investigation.

Furthermore, the roadmap underscores the importance of bolstering military-to-military relations and deepening co-operation between the European and Indian Navy, mainly to ensure stability in the Indian Ocean. Consequently, new dialogues on maritime security and defence have been instituted.

The strategic-partnership roadmap also underscores the need for “comprehensive space collaboration” on themes such as Earth observation, satellite navigation and space science.

Given the emergence of public health as a security threat and economic risk, the roadmap also emphasises the need for a coordinated response to mitigate the impact of COVID-19 on public health and the economy. The two sides agreed to support but reform the capacities of the WHO to enhance its response to pandemics.

Furthermore, to deal with the challenges to the global order, the leaders voiced their support for a rules-based multilateral order. They discussed the role of the United Nations, the World Trade Organization and the World Health Organization in alleviating the health and economic impact of COVID-19.

The main achievement of this summit is that the EU and India have agreed to engage with each other geopolitically to promote multilateralism.