A Eurocentric Reset: A Gateway for India

Syllabus: GS2/International Relation

Context

• The recent agreement between the United Kingdom (UK) and European Union (EU) may seem Eurocentric, but presents both opportunities and challenges for India that demand urgent attention.

Eurocentric UK-EU Agreement

• The agreement between the UK and EU is considered Eurocentric because it primarily focuses on internal European affairs, reinforcing regional cooperation rather than expanding global outreach. These include:
  • Prioritization of European Trade & Standards: It lowered trade friction, especially critical for pharmaceuticals (India supplies over 25% of the U.K.’s generic drug needs).
    • It improved market access, particularly in seafood. (India’s exports are about $7.38 billion).
  • Others include defense & security realignment, limited global trade expansion, and Brexit reconciliation rather than global outreach.

Key Aspects: – India and EUFTA Negotiations: To enhance market access, strengthen regulatory cooperation, and boost competitiveness. 1. India is pushing for reductions in non-tariff barriers (NTBs) and a balanced regulatory framework. – Economic & Investment Cooperation: The EU is India’s second-largest trading partner, with bilateral trade exceeding $120 billion annually. 1. India’s exports to the EU reached $86 billion in FY2024. – Security & Counter-Terrorism Collaboration: The EU has expressed solidarity with India’s stance against terrorism, supporting its zero-tolerance policy. – Strategic & Geopolitical Engagement: India and the EU are working on Indo-Pacific security, climate action, and technology partnerships. Key Aspects: India and UK – FTA & Economic Cooperation: India and the U.K. recently concluded FTA, benefiting 99% of Indian exports from tariff reductions. 1. India’s exports to the U.K. reached $12 billion in FY2024. 2. It aims to make it easier for British firms to export whisky, cars, and other products to India, boosting overall trade. 3. The Double Contribution Convention was finalized, strengthening bilateral financial cooperation. – Defense & Security Collaboration: India and the U.K. discussed regional security concerns, including Russia-Ukraine, Indo-Pacific, and West Asia. 1. They are expanding cooperation in counter-terrorism, defense technology, and maritime security. – Green Energy & Climate Initiatives: Both countries are working on green energy projects, including renewable energy investments and climate action strategies. 1. It aims to accelerate India’s transition to sustainable energy. – People-to-People & Educational Ties: The U.K. remains a top destination for Indian students, with growing collaborations in higher education and research. 1. Cultural and diplomatic exchanges continue to strengthen historical ties.

UK-EU Agreement: Impacts

• India’s Trade and Economy: Indian exporters, particularly in pharmaceuticals, textiles, seafood, and agro-based products, may benefit from simplified compliance and revived supply chain fluidity.
  • In FY2024, India’s exports to the EU stood at $86 billion, while exports to the U.K. totaled $12 billion.
  • India-France bilateral trade reached $15.1 billion in 2024-25.
• Geopolitical and Strategic Implications: A more synchronized UK-EU Foreign Policy, particularly in defense and the Indo-Pacific, offers India an avenue to enhance multilateral coordination with the EU.
  • India already operates under the EU-India Strategic Partnership: A Roadmap to 2025, and in 2022, it renewed its Comprehensive Strategic Partnership with the UK, covering cybersecurity, climate action, and maritime security.
  • Strategic ties with France, Germany, and the UK are vital to India’s defense modernization and technological ambitions, especially regarding naval power.

Concerns For India

• Meeting Stricter Quality & Environmental Standards: Eco-friendly packaging, reduced carbon footprint, and ethical sourcing are becoming critical, requiring additional investment from Indian Small and Medium Enterprises (SMEs).
• Compliance Costs & Technical Barriers: Adapting to new regulatory frameworks in food safety, pharmaceuticals, and textiles means higher compliance costs.
  • Many Indian SMEs lack the capital, technological expertise, and international legal knowledge to efficiently handle these changes.
• Limited Access to International Certifications: European markets demand CE markings, ISO certifications, and stringent audits for exports, which can be difficult for SMEs to obtain.
  • Navigating bureaucratic complexities in securing approvals may slow market entry for smaller enterprises.
• Supply Chain & Logistics Adjustments: With evolving trade policies, shipping costs and logistical challenges may arise.
  • SMEs dependent on raw materials or intermediate goods from multiple countries must rethink procurement strategies to remain competitive.
• Digital & Technological Gaps: European trade increasingly requires blockchain-based tracking, AI-driven compliance tools, and real-time monitoring.
  • Without investments in digital infrastructure, SMEs risk falling behind larger firms already compliant with advanced tech standards.

India’s Options: Navigating UK-EU Agreement

• Strengthening Trade Agreements: Accelerate FTA negotiations with the EU and UK to ensure preferential access to European markets.
  • Push for mutual recognition of quality standards, reducing trade friction for Indian exporters.
• Enhancing Industry Compliance & Sustainability: Upgrade domestic regulatory frameworks to align with stringent EU and UK norms, especially in pharmaceuticals, textiles, and technology.
  • Expand sustainability-driven initiatives, encouraging businesses to adopt ESG (Environmental, Social, and Governance) standards.
• Boosting Innovation & Investment: Facilitate European investments in India’s manufacturing and tech sectors through incentives like the Remission of Duties and Taxes on Exported Products (RoDTEP) and Production-Linked Incentive (PLI) scheme.
  • Strengthen India’s position as a global supply chain alternative, especially in electronics and green energy.
• Expanding Strategic and Defense Cooperation: Deepen security collaboration with France, Germany, and the U.K. in areas like cybersecurity, maritime security, and defense technology sharing.
  • Push for greater Indo-Pacific engagement, leveraging India’s geopolitical influence.
• Strengthening Regulatory Frameworks: India should harmonize domestic quality standards with EU and UK norms, ensuring compatibility in food safety, environmental regulations, and labor practices.
  • Expanding initiatives like the Quality Control Order (QCOs) and strengthening Bureau of Indian Standards (BIS) certifications will help manufacturers meet global benchmarks.
• Technology & Infrastructure Development: India’s National Logistics Policy (NLP) and Gati Shakti program aim to modernize transport networks.
  • The UK-EU reset could enhance India’s collaboration with European firms in areas such as smart cities, AI, renewable energy, and cybersecurity.
• Strengthening Digital Compliance Infrastructure: Implementing advanced tracking systems for exports, such as blockchain-based product authentication and AI-driven quality control, will improve transparency and traceability.
  • Expanding digital certification platforms will enable exporters to meet evolving standards with efficiency.
• Strengthening Diplomatic and Soft Power Engagement: Promote cultural and educational exchanges with European institutions, enhancing India’s soft power.
  • Establish more bilateral innovation councils to foster joint research and tech development.

Conclusion

• India’s economic policy is built on pillars of growth, self-reliance (Atmanirbhar Bharat), trade liberalization, and strategic global partnerships, and designed to capitalize on shifting global trade landscapes. 
• By leveraging the U.K.-EU reset, India can enhance exports, attract investment, upgrade industry standards, and strengthen geopolitical influence.
• However, regulatory adaptation and SME capacity-building will be critical for long-term success.

Source: TH