At a virtual summit between India and the EU on Wednesday (15 July), leaders will take stock of a rich relationship, but one that the EU believes has not yet delivered its full potential.
For this first summit since 2017, the EU will be represented by Charles Michel, President of the European Council, by Ursula von der Leyen, President of the European Commission, and by the High Representative of the Union for Foreign Affairs and Security Policy, Josep Borrell, while Prime Minister Shri Narendra Modi will represent India.
On the agenda for this interview is the response to the Covid-19 pandemic. At the end of May, Mr Borrell and the Indian Minister for External Relations, Subrahmanyam Jaishankar, agreed that the Covid-19 pandemic made the EU-India Strategic Partnership even more relevant (see EUROPE 12495/36).
Leaders will discuss modalities for strengthening cooperation to better control the impact of the virus at both the human and socio-economic levels. India is one of the countries most affected by the pandemic, with more than 900,000 people infected in the country.
Leaders will reiterate the need for a universal vaccine strategy, ensuring the flow of essential medical supplies and keeping global trade and value chains open.
New strategy, state of play
The parties will also discuss ways of strengthening their Strategic Partnership and will approve, among other things, Agenda 2025, which identifies common priority areas with short- and medium-term objectives. According to a European source, climate action should be at the centre of this agenda.
While the framework of the bilateral relationship is still governed by the 1994 EU-India Cooperation Agreement, the Partnership has been enriched in 2018 with a new strategy (see EUROPE 12141/23). This includes an emphasis on foreign policy, such as identifying common responses to global and regional challenges. It also develops defence cooperation (see EUROPE 12407/28) and promotes effective multilateralism based on common values and objectives.
Topics to be discussed at the summit: leaders are expected to reaffirm their commitment to promote effective multilateralism and a rules-based multilateral order, with the United Nations (UN) and the World Trade Organization (WTO) at its centre. India is indeed a key global player, stressed a European source, particularly through its role in the UN Security Council where, since June 2020, it has been elected as a non-permanent member for the eighth time.
Leaders will also discuss their cooperation on security, climate, environment, trade and investment, the digital economy and connectivity. They could also discuss foreign policy, including tensions between India and China (see EUROPE 12509/22).
Both sides could also reaffirm their commitment to human rights. One senior official expressed the hope that the human rights dialogue could resume as soon as the Covid-19 pandemic permitted.
Economic synergies
The rapid economic growth of the sub-continent over the last decade makes it an attractive destination for European economic operators. With a growing population of more than 1.3 billion, India has attracted twice as much European investment over the last decade. The EU has strengthened its presence as an investor, accounting for 22% of total foreign direct investment (FDI) inflows into India in 2019-2020. The EU was the third largest recipient of Indian FDI over the same period.
Some 6,000 European companies are present in India, but European economic operators often face discrimination, red tape and other trade barriers fostered by a still relatively restrictive regulatory environment. Furthermore, the EU points to serious shortcomings in the protection of intellectual property rights.
Untapped potential
In 2019, the total value of EU-India trade in goods was €80 billion. The EU also absorbs more than 14% of total Indian exports.
Telecommunications, computer, and information services... trade in services also grew steadily, reaching €30 billion in 2018. Trade remains relatively balanced, with EU exports to its Asian partner totalling €14 billion, compared to €15 billion of imports from India.
Although the bloc of 27 is India’s largest trading partner, with bilateral trade in goods and services of more than €100 billion, the relationship is far from delivering its potential.
These trade relations are still governed by the 1994 Partnership and Cooperation Agreement, since the two parties failed to conclude a free trade agreement. Indeed, the talks launched in 2007 led to a dead-end in 2013 for a “mismatch of the level of ambitions”, according to the Commission, and attempts to relaunch them failed (see EUROPE 11989/7).
But the EU, which wants to increase the legal security of its FDI, has been trying for several years to convince New Delhi to agree to negotiate an autonomous investment protection agreement, as India has denounced all its bilateral investment agreements with the Member States.
A new dialogue on trade and investment, which will take place at ministerial level, should be announced at the summit. It would allow for the follow-up of these issues at the political level. (Original version in French by Hermine Donceel with Camille-Cerise Gessant)