India-EU Relations

  • EU is India’s first trade partner in goods and services and also largest foreign investor with a stock exceeding US$ 81.52 billion as of March 2017.
  • There are more than 6,000 EU companies currently present in India, providing direct and indirect employment to over 6 million people. 
Recent Issues:
India and the EU are engaged in sorting out issues such as
  • EU ban on some pharmaceutical products (700 generic drugs) clinically tested by GVK Biosciences. The EU ban had led to India deferring the negotiations on the proposed bilateral Free Trade Agreement (FTA).
  • Italian Marine case (which is now solved a bit after SC verdict. Read related notes below)
Vulnerability  of EU
  • Impact of BREXIT
  • Increasing Terrorist attacks
  • The worsening refugee problem
  • Growing opposition to globalization
Investment Facilitation Mechanism:
The mechanism will allow for a close coordination between EU and India with an aim to promote and facilitate EU investment in India. The IFM will cover new investors as well as those already established in India
Bilateral Trade and Investment Agreement (BTIA):
To enhance the trade relations, both started negotiations on Bilateral trade and Investment Agreement (BTIA) in 2007. However, major disagreements remain over the issues of market access in services, agriculture, automobile, IPR .
The friction further increased due to two incidents –
  1. Italian marines arrest by India
  2. EU ban on 700 Generic Indian drugs.
Even in recently held India-EU summit in Brussels, European Commission remained muted on the negotiations on the BTIA.
Another sticking point that stalled talks between the European Union (EU) and India had been the EU’s concern over human right violations in India.
ON the positive side, as highlighted in the summit’s EU-India Agenda for Action-2020, progress was made in bilateral cooperation in various fields — from foreign policy to outer space :
  1. Promise of action that in areas such as water, climate and energy with adoption of joint declarations on the India-EU Water Partnership and a Clean Energy and Climate Partnership.
  2. Joint declaration on counter terrorism – Both agreed to cooperate in countering violent extremism, disrupt recruitment of terrorists and prevent the free passage of foreign fighters. It also called for the early adoption of the Comprehensive Convention on International Terrorism in the UN. 
  3. Adoption of The Common Agenda on Migration and Mobility (CAMM) – to control and organize migration. Prevention of human trafficking and promoting international protection are identified as priority areas. Points of special interest to India on the agenda included easier visa procedures for skilled workers, IT professionals, and business travellers. 
  4. Italian Marines issue – Both parties have officially expressed their confidence in the legal processes of the Permanent Court of Arbitration, where the case of the Italian marines, is currently being heard. 
  5. Infrastructure– India and the EIB signed the first tranche of a Euro 450-million-loan towards the construction of a metro rail line planned in Lucknow.
  6. Investment – The agenda also called for the “creation of favourable circumstances for investment
For many years India – EU free trade talks have not progressed well. What are the issues that are holding back signing a free trade agreement between India and EU? What are the benefits for India?
Examine. (200 Words)
India-EU relationship dates back to 1960s when India was the first country to establish relationship with European economic union which later evolved into common market -European union.
Currently EU is the largest trading partner of India and account for 20% of India’s trade and a major source of FDI whereas India is the 9th largest trading partner.
However multiple negotiating rounds, EU- India summits have not been able to iron
out differences on the BTIA for the following reasons
EU’s concerns:
  1. India’s protectionism to automobile sector
  2. India’s Intellectual property regime with the provision of compulsory licensing and manufacture of generic medicine
  3. Domestic source obligation in the multi brand retail
  4. Duty and tariff protection in areas of wine , spirits and dairy products
  5. Civil nuclear energy generation legislation
  6. Data Security: Based on current standard of protection to data in India the EU refused to grant the status of Data Secure Nation. Data secure nation needs to protect the important data related to innovation, research, individual details, IP etc. to be safeguarded. This affect High end business products specifically. European companies doing outsourcing business with countries not certified as data secure have to follow stringent contractual obligations that increase operating costs and affect competitiveness.
  7. Vodafone case has threatened EU investors from entering India due to retrospective taxation measures. So such taxation is also acting as road block.
  8. EU allegations of Human Rights violations concealed funding to NGOs in India and recent legal proceedings regarding Italian marines have brought ties at stand still.
India’s concerns:
  1. European Union’s heavily subsidised agro industry. This could hurt Indian farmers
  2. EU Import restriction- like ban on the import of mangoes from India
  3. Work visa restriction – movement of skilled professionals
  4. Technology transfer issues
India EU FTA has a lot of road blocks but it is in benefit of each other. EU will gain market of 1.2 billion whereas India will gain in terms of Technology, Investments from EU. Both are needed to be pragmatic in approach while working on it in future. India’s share in services trade with EU can grow manifold. Cheaper imports of European luxury items like cars, wine. European expertise in agriculture, infrastructure and urban management can augment Indian drive in make in India, Swachh Bharat Abhiyan & agricultural research.
Compared to India’s relationship with US, Germany and France, its relationship with the European Union (EU) is said to be in doldrums. Critically examine why. (200 Words)

India-EU relations have been on the wane for some time. However, at the same time, India’s relations with the constituent units of the Union including Germany and France are at historical highs. This dichotomy may be explained on account of the following factors:
  1. India doesn’t take kindly to being lectured to on issues which she considers herself competent of handling. For example, India considers human rights violations as a domestic issue and would wish to handle it within India’s political space. EU’s insistence on including HR provisions into Free Trade Agreement has hampered trade between the two.
  2. Given the lack of cohesion among the EU constituents on strategic issues, India prefers establishing bilateral relations rather than dealing with the EU as a whole.
  3. The case of the two Italian marines being tried in India was manslaughter has become a festering wound. The EU’s stand on the issue is seen by many in India as a challenge to her sovereignty.
  4. EU’s reluctance to provide India with strategic dual use technology has pushed India into a closer huddle with the US and other European countries like France. India therefore, doesn’t see the EU as a reliable partner.
  5. EU is characterised by over-institutionalized and over-bureaucratized, which makes it far less attractive as a bilateral partner as compared to less institutionalised regimes such as the ASEAN and SAARC.
  6. EU has next to nothing to contribute to her energy demand or other principal security interests.
  7. When it comes to India’s desire to find a permanent place on the UNSC, it is not the EU but the existing European permanent members, the UK and France, who bring more value to the table for India.
  8. Finally, the on-going Eurozone crisis has greatly undermined India’s confidence in the EU.
A framework addressing the above mentioned issues could go a long way in strengthening ties in light of India and EU’s affinities and common concerns such as increasing fundamentalism.

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