In news
- Recently, the India-EU Leaders’ Meeting was held.
About
- The meeting was held in a hybrid format with the participation of leaders of all the 27 EU Member States as well as the President of the European Council and the European Commission.
- This is the first time that the EU hosted a meeting with India in the EU+27 format.
- The leaders expressed their desire to further strengthen the India-EU Strategic Partnership based on a shared commitment to democracy, fundamental freedoms, rule of law and multilateralism.
Major Highlights of Summit
- Key thematic areas: The leaders exchanged views on three key thematic areas:
- Foreign policy and security;
- COVID-19, climate and environment;
- Trade, connectivity and technology.
- Peaceful Indo-Pacific: The leaders acknowledged the importance of a free, open, inclusive and rules-based Indo-Pacific and agreed to closely engage in the region, including in the context of India’s Indo-Pacific Ocean’s Initiative and the EU’s new strategy on the Indo-Pacific.
- India-EU connectivity partnership
- India and the EU launched an ambitious and comprehensive ‘Connectivity Partnership’ which is focused on enhancing digital, energy, transport and people-to-people connectivity.
- The Partnership is based on the shared principles of social, economic, fiscal, climate and environmental sustainability, and respect for international law and commitments.
- The Partnership will catalyse private and public financing for connectivity projects.
- Contract for the Pune Metro Rail Project: A finance contract of Euro 150 million for the Pune Metro Rail Project was signed by the Ministry of Finance, Government of India, and European Investment Bank.
- It will also foster new synergies for supporting connectivity initiatives in third countries, including in the Indo-Pacific.
- The partnership is seen as a response to China’s Belt and Road Initiative and comes as the EU’s negotiations with China on their Comprehensive Agreement on Investment (CAI) have run into trouble.
- Relaunch of Free Trade Negotiations
- The landmark announcement was made by leaders of India and the EU on the resumptions of negotiations for bilateral Free Trade and Investment Agreements. At the same time, a separate investment protection agreement will be worked upon on a parallel track.
- The investments are an area of the EU’s interest while India is keen to get more market access for its goods and services there.
- The two sides are committed to concluding the two agreements together at the earliest to realise the full potential of the economic partnership.
- India and the EU also announced dedicated dialogues on WTO issues, regulatory cooperation, market access issues and supply chain resilience, demonstrating the desire to deepen and further diversify economic engagement.
- India-EU Business Roundtable: It was organised to highlight the avenues for cooperation in climate, digital and healthcare.
- India-EU Strategic Partnership: India-EU Leaders Meeting has set a significant milestone by providing a new direction to the Strategic Partnership and giving a fresh impetus for implementing the ambitious India-EU Roadmap 2025 adopted at the 15th India-EU Summit held in July 2020.
Immediate benefits of India-EU cooperation
- Reliable supplier: India is ramping up vaccine production so that it can expand vaccination coverage to other countries across the world through high-quality affordable vaccines and other medical supplies. The countries are looking for trusted trading partners amid the pandemic and given India’s track record, it will be the EU’s “most natural and reliable ally, partner and friend”.
- Competitive edge: Noting that high cost of production in Europe but competitive and reasonable costs in India, give European businesses an opportunity to produce in India. This can create a win-win partnership.
- Multitude of manufacturing opportunities: As the world moves away from over-concentrated risky supply chains, the EU can trust India to provide a multitude of investment and manufacturing opportunities. By emphasising global quality and productivity standards, India is looking at changing the entire landscape of a billion people to align India with the developed world.
- IT and trained workforce: India has become a major hub for the IT and service sector, thereby transforming the image of India itself. The country offers a very attractive investment market for different sectors, given its viable legal structures and trained workforce.
- Atma Nirbhar Bharat and Openness: The concept of Atma Nirbhar Bharat does not mean being a protectionist and closing our doors to the world. On the contrary, India wishes to open its doors wider and warmly welcomes businesses from across the world to bring world-class technologies to India, state-of-the-art products and services into India & investments in manufacturing, services and infrastructure.
- Waiver on the transfer of technology: India has a very strong judiciary and respect for rule of law, transparency in all decision making, political stability, IPR protection. There is no compulsion for any company to do technology transfer in India.
- Continuous Reforms: India is actively working towards improvement in ease of doing business rankings, in its competitiveness, de-bureaucratising systems and making procedures simpler, opening up newer sectors for more FDI, strengthening regulatory practices.
Challenges
- Translation of agreements: A major challenge lies in translating government exchanges and agreements into a substantial partnership, enhancing trade and investment flows.
- Bureaucratic rigidity: The EU, which is India’s biggest trade partner, is seeking to expand the bilateral trade volumes. India, however, suffers from excessive bureaucratic rigidity, and more needs to be done to exploit its full business potential.
- Detrimental effects of reciprocity: Despite its economic growth and potential, however, the fact cannot be overlooked that India faces numerous domestic development challenges and reciprocity could have detrimental effects on its agricultural sector.
- Protectionist behaviour of the EU: Although India has brought down its tariffs, it has increasingly had to contend with non-tariff barriers such as sanitary and phytosanitary conditions and extensive procedures for securing export certification to the EU.
- High tariff barriers: The EU asserts that India’s high tariff barriers are not transparent enough and thus not conducive to creating a trade-enabling structure.
- Limited trade items: A major challenge on both sides is to expand the traditional trade items to include sectors such as services, bio and nano-technology and genomics, where collaboration would deliver greater benefits to both.
- Different global aspirations: Although some of India’s strategic interests converge with those of the EU, both have varied global aspirations. While India follows democratic values, despite the emphasis on normative values, the EU is also driven by realist considerations based on trade.
- No common voice for UNSC reform: Many EU Member States are supportive of India’s position on the UNSC reform, but there is no common EU position
Way Forward
- In a complex international environment, the Republic of India and the European Union, both “unions of diversity”, sharing values of democracy, rule of law and human rights, are equally convinced of the necessity to preserve the rules-based international order and effective multilateralism. India and the EU have a common interest in each other’s security, prosperity and sustainable development.
- The India-EU Leaders’ Meeting was an unprecedented opportunity for discussion with all the leaders of the EU Member States. It is a significant political milestone and will further build on the momentum witnessed in the relationship since the 15th India-EU Summit in July 2020.
- India-EU, therefore, endeavours to develop further their Strategic Partnership, based on this Roadmap. They can contribute jointly to a safer, cleaner and more stable world.
- Both these agreements are going to lift India-EU economic relationship to another level with enhanced bilateral flow of trade, investments, job creation, technology transfers and innovations.
- At the same time, the business community of the EU and India can use this opportunity and actively take part in the joint efforts to bolster and develop our trade ties, economic ties, people to people ties and cultural relationships.
Source: PIB
