EU-India Agenda

The European Union (EU) has recently unveiled a New Strategic EU-India Agenda aimed at strengthening bilateral relations and building a comprehensive framework for cooperation in several crucial areas. This initiative emphasizes mutual growth through shared interests and complementary strengths. It comes at a time when both regions are increasingly focused on navigating global challenges, enhancing economic and technological ties, and improving security cooperation.

Five Pillars of the ‘New Strategic Agenda’ Between India & the EU

1. Prosperity, Sustainability, Technology & Innovation:

   • The agenda identifies the untapped potential in trade and investment, focusing on the Free Trade Agreement (FTA) and the Trade and Technology Council (TTC).

   • Tech Cooperation will be advanced through EU-India Startup Partnerships and Horizon Europe.

   • Both regions aim to collaborate on green transitions, food security, health, climate resilience, and disaster management.

2. Security & Defence:

   • Focus areas include maritime security, cyber defence, counterterrorism, and defence industrial cooperation. This will promote joint efforts in technology and innovation, particularly in the defence sector.

3. Connectivity & Global Issues:

   • The partnership will support the India-Middle East-Europe Economic Corridor (IMEC), facilitating multilateral cooperation and emphasizing the Global Gateway initiative.

   • Both parties are committed to strengthening international law, multilateral values, and global governance, especially through active engagement in global forums.

4. People-to-People Cooperation:

   • This pillar promotes skills mobility and establishes a framework for study, work, and research.

   • Cultural and academic collaborations are encouraged, as well as the creation of an EU-India Business Forum to further engage civil society, youth, think tanks, and businesses.

5. Enablers Across Pillars:

   • The agenda also focuses on improving EU-India coordination at all levels and aligns strategic efforts across EU Member States, aiming for a comprehensive strategic plan to strengthen the partnership.

What Defines the India-EU Relationship?

The India-EU relationship is multifaceted and characterized by shared values, economic cooperation, and strategic alignments. The relationship continues to evolve, with both regions recognizing the immense potential for collaboration in various fields, including trade, security, and innovation.

1. Shared Values

• Democracy and Multilateralism: Both India and the EU are committed to upholding democratic principles, promoting the rule of law, and strengthening multilateralism in global governance. Their partnership is rooted in their mutual respect for democracy, human rights, and international cooperation.

• Prosperity: Both parties emphasize the importance of sustainable economic growth and development. India and the EU are aligned on creating a prosperous future, not just for themselves but for the global community, through shared efforts in trade, technology, and green energy.

2. Economic Synergy

• Growing Market Access: India serves as a key partner for the EU due to its rapidly expanding market. The Indian economy is among the largest in the world, with a burgeoning consumer base, and is strategically positioned in the Indo-Pacific.

• EU’s Contribution: The EU brings substantial investments, technological expertise, and market access to India. Sectors like green technology, textiles, and electronics are areas where the EU can collaborate and contribute to India's industrial growth.

3. Strategic Partner in the Indo-Pacific

• India plays a pivotal role in the Indo-Pacific region, a key area for global trade and geopolitics. The EU views India as a strategic partner in this region, with mutual interests in security, trade, and regional stability.

Trade and Economic Relations

1. Bilateral Trade

• Trade in Goods: In the fiscal year 2023-24, India’s trade in goods with the EU reached a substantial USD 137.41 billion, making the EU India’s largest trading partner in goods. This highlights the depth of commercial relations between the two.

• Trade in Services: Bilateral trade in services was valued at USD 51.45 billion in 2023, reflecting the strong service-sector ties, including in areas like IT services, finance, education, and healthcare.

2. Foreign Direct Investment (FDI)

• The EU is a significant investor in India, accounting for approximately 17% of total FDI inflows. This investment has contributed immensely to job creation, technology transfer, and industrial growth in India, with particular emphasis on sectors like automobiles, technology, and manufacturing.

Maritime Security and Strategic Cooperation

1. Enhancing Security Cooperation

• The Indian Ocean is crucial for global trade, particularly for the EU as a key maritime trade route. As India’s naval presence in the region grows, the EU has shown increasing interest in strengthening its security cooperation with India, particularly through initiatives like the Enhancing Security Cooperation in and with Asia (ESIWA).

• EU-India Joint Naval Exercise: In 2023, India and the EU conducted their first-ever joint naval exercise in the Gulf of Guinea, focusing on maritime security. This collaboration aligns with both regions’ goal of securing vital sea lanes and countering emerging threats in the region.

Key Facts About the European Union

1. Founding and Membership

• Founded: The EU was established in 1951, after the Second World War, by six countries (Belgium, France, Germany, Italy, Luxembourg, and the Netherlands). This was initially under the European Coal and Steel Community (ECSC) and later evolved into the European Economic Community (EEC) and finally the European Union.

• Current Membership: The EU now consists of 27 member states, including Germany, France, Italy, Spain, and Poland. The United Kingdom (UK) was a member until it left the EU in 2020 (Brexit).

• Smallest and Largest Countries: Malta is the smallest EU member state by area, while Germany has the largest population. France is the largest in terms of land area.

2. Open Borders and Single Market

• Schengen Area: The Schengen Area allows for the free movement of people across most EU countries, excluding Ireland and Cyprus. Non-EU countries like Iceland, Norway, Switzerland, and Liechtenstein are also part of this area.

• Single Market: The EU operates a single market, where goods, services, capital, and people can move freely across member states. This boosts trade and economic integration within the EU.

3. Climate Goals

• The EU is committed to achieving climate neutrality by 2050 and has set a goal to reduce emissions by 55% by 2030. This aligns with the EU’s broader vision of a green transition, promoting sustainable growth, renewable energy, and clean technologies

Significance of India-EU Relations

Mutual Significance:

• Diplomatic Ties: The relationship started in 1962 with the European Economic Community (EEC) and was upgraded to a Strategic Partnership in 2004.

• Trade Partnership: The EU is India’s second-largest trading partner, with trade amounting to €120 billion (11.5% of India’s total trade).

• Strategic Alignment: India and the EU share values in areas like security, renewable energy, climate action, and multilateralism. They engage in dialogues on issues like cybersecurity, counterterrorism, and non-proliferation.

Significance for India:

• Economic Relations: The EU is India’s ninth-largest trade partner, with Foreign Direct Investment (FDI) valued at USD 107.27 billion (2000-2023).

• Technology & Innovation: The India-EU Trade and Technology Council (TTC) focuses on areas like semiconductors, artificial intelligence (AI), and clean energy.

• Security & Defence: European defence companies play a role in modernizing India’s military, including partnerships under Make in India.

Significance for the EU:

• Market Access: India offers the EU access to a large, growing market, complementing their ongoing economic agreements.

• Geopolitical Cooperation: India’s strategic position in the Indo-Pacific is vital for the EU’s regional influence and security.

• Security & Stability: India’s role in Indian Ocean security is crucial for safeguarding significant trade routes between Europe and Asia.

Key Barriers to India-EU Relations

1. Stalled FTA Negotiations:

   • Tariff disputes remain, with the EU seeking lower tariffs on automobiles, spirits, and dairy, while India demands market access for pharmaceuticals and IT services.

   • The EU’s Carbon Border Adjustment Mechanism (CBAM) poses additional challenges for Indian exports.

2. Investment & Regulatory Barriers:

   • EU trade regulations, particularly technical barriers and sanitary & phytosanitary measures, continue to affect Indian businesses.

   • Investment protection concerns also arise, especially with Switzerland’s suspension of the Most Favoured Nation (MFN) clause in its Double Taxation Avoidance Agreement (DTAA) with India.

3. Data Privacy Challenges:

   • EU’s strict data laws complicate digital exports for Indian firms, and India’s lack of EU data adequacy status forces small IT companies to incur high compliance costs.

4. Foreign Policy Divergences:

   • India’s neutral stance on issues like Russian sanctions creates friction with the EU, especially regarding Russia’s military activities and oil purchases.

5. Supply Chain Risks:

   • China’s dominance in supply chains remains a key challenge for both India and the EU, underlining the need for resilient and diversified trade routes.

Strategies to Strengthen India-EU Relations

1. Accelerate FTA and Trade Facilitation:

   • Fast-track negotiations and resolve tariff disputes to enhance trade ties and supply chain integration.

2. Promote High-Tech Exports & Investment:

   • Attract European investment in India’s manufacturing sector and focus on sectors like renewable energy, clean tech, and AI.

3. Establish Data-Sharing Framework:

   • Negotiate a Privacy Shield like the EU-US model to ease cross-border data flows, and implement frameworks for mutual recognition to reduce compliance costs.

4. Green Technology Partnerships:

   • Enhance cooperation on green hydrogen, electric vehicles, and carbon-neutral technologies, addressing both climate change and energy security.

5. Reform Investment Policies:

   • India needs to improve intellectual property rights (IPR) protections and ease of doing business to attract more European tech firms.

6. Enhance Security Cooperation:

   • Expand joint naval exercises, cyber defense partnerships, and intelligence sharing to better counter regional threats, especially from China.

Conclusion

The New Strategic EU-India Agenda marks a significant step forward in strengthening bilateral relations between India and the EU. By focusing on key areas such as trade, technology, security, and global governance, both sides can drive economic growth, improve strategic autonomy, and bolster multilateral influence. While challenges such as regulatory barriers, data privacy issues, and foreign policy divergences remain, targeted strategies such as accelerating FTA negotiations, promoting green technologies, and strengthening defense ties can pave the way for a more resilient and mutually beneficial partnership