India - EU Relations: A Comprehensive Guide for UPSC Aspirants

A Glimpse into the India-EU Relations

The diplomatic relations between India and the European Union can be traced back to the early 1960s, making India one of the first countries to establish ties with the then European Economic Community.

• In 2004, the relationship was upgraded to a 'Strategic Partnership' during the 5th India-EU Summit.
• The inaugural India-EU Summit was held in Lisbon, Portugal in 2000.
• Being the world's two largest democracies, both the EU and India are committed to upholding and promoting human rights, a rules-based global order, effective multilateralism , sustainable development, and open trade.
• The Foreign Ministers of India and the EU also interact regularly to discuss various strategic matters.

The Dynamics of India-EU Trade Relations

The European Union is India's third largest trading partner, contributing to 10.8% of India's total trade in goods. Over the last decade, the trade in goods between India and the EU has witnessed a 30% increase.

• India enjoys a positive trade balance with the European Union, particularly in terms of agri-food exports.
• In 2020, the trade in services between India and the EU was around €30.4 billion.
• The European Union's foreign investments in India witnessed a significant surge, amounting to €87.3 billion in 2020.
• While India accounts for 2.1% of the EU's total trade in goods, it is still behind China and the US, whose shares are around 16.2% and 14.7% respectively.
• Union Minister of Commerce's recent visit (May 2023) facilitated business-to-business interactions across various sectors including food and beverages, technology, chemicals, automobiles and auto components, textile chemicals, metals, and steel.

Challenges in India-EU Trade Partnership:

• The European Union has expressed concerns regarding high tariffs imposed by India in various sectors such as dairy, alcoholic beverages, automobiles, and auto components.
• Indian businesses, on the other hand, have voiced concerns about regulatory issues like high technical standards and carbon tax imposed by the European Union.
• There are differing views between India and the EU on several matters such as the content of investment agreements, intellectual property rights , and strategies to combat climate change.

The Road Ahead:

• The India-EU Trade and Technology Council (TTC) can serve as a platform to resolve differences and reach a consensus.
• Both India and the EU can leverage forums like the World Trade Organization (WTO) and G20 where they are active participants.
• The Minister's visit can help identify mutual areas of interest between the EU and India and garner support from the European Union for India's G20 priority areas such as inclusive and growth-oriented trade, resilient global value chains (GVCs), integrating MSMEs in global supply chains using digital platforms, logistics for trade, and WTO reforms.
• India and the EU have agreed to collaborate on common priorities in the context of WTO reforms such as dispute resolution mechanism, subsidies on agriculture and fisheries, and an e-commerce moratorium.
• Bilateral trade and investment flows can be enhanced through joint capacity-building programs for supporting MSME integration with global value chains, support to startups, joint research, and joint project on sustainable food systems.
• To address the issue related to technical standards and the mobility of professionals, India and the EU can enhance collaboration between regulatory bodies and mutual recognition agreements.