In today’s world, where multi-vector, multi-directional and multi-dimensional relations have come to the fore as a foreign policy priority in international relations, countries are taking active steps to diversify and develop their bilateral relations. Especially with the Russia-Ukraine War and the global rivalry between the United States of America (USA) and China, many states are trying to act with an eye on the West-Russia or West-China balance. As part of the balancing policy, dialogues with various states are being developed and institutional partnerships are being strengthened. India, which came to the fore with its stance on the Russia-Ukraine War, also takes the West-Russia balance into consideration. This is because the New Delhi administration is developing its relations with the United States and Western countries while improving its cooperation with Russia. Developments in India-European Union (EU) relations can also be evaluated in this context.
The parties have a mutual tendency to deepen relations, particularly economic and trade ties. Particularly important are developments towards a free trade agreement. On 12 April 2023, the Indian Ministry of Commerce announced that the Commerce Ministers of India and France held discussions on the ongoing negotiations to conclude a free trade agreement between India and the EU. Indeed, Piyush Goyal, India’s Minister of Commerce and Industry, visited Paris to attend the India-France Business Summit. In a statement, it was emphasized that the ministers discussed issues related to market access and discussed priority areas for negotiations on an India-EU free trade agreement.[1]
Trade negotiations between the parties have been ongoing for more than seven years. Therefore, it is important to revitalize the trade negotiations, which have gone through 15 rounds in this process. Because the signing of a free trade agreement would have major implications for both actors.
It is strategic for the EU as it is its first agreement with an emerging economy. It will also support the EU’s objective of using such agreements to promote the integration of partner countries into the world economy and strengthen its role. For India, the agreement will serve Prime Minister Narendra Modi’s “Made in India” campaign and his goal of making India a regional leader and global manufacturing hub.[2] The fact that it will improve trade and investment flows between the parties increases the importance of the agreement.
India is a valuable actor as the EU’s tenth largest trading partner. For India, the EU is its third largest trading partner. There has recently been a more results-oriented approach to increase interaction and enhance cooperation in various fields. On February 6, 2023, the EU and India established a new Trade and Technology Council and are taking steps to strengthen their ties. Announced in April 2022, this council is expected to increase cooperation. In fact, the European Commission announced that three working groups on digital governance and connectivity, green technology and trade will start work ahead of the ministerial meeting scheduled for spring 2023.[3]
However, the EU-India High Level Dialogue on Trade and Investment and the EU-India Trade Sub-Commission, established in 2021[4] following the decision of the EU-India Summit in 2020[5] are also key instruments for enhancing ties. At the same time, the special working groups and dialogues on the occasion of the Partnership Agreement between the parties are important.
It is well known that the EU is seeking to strengthen its ties with other democracies and reduce its dependence on China on strategic issues such as digital transformation and green transition. In such a process, the ties developed with India reveal that India is seen as a strategic partner in this goal. As one of the fastest growing economies in the world, India is a trade and investment partner with great potential for the EU. Indeed, the increasing volume of trade confirms this. It is known that trade between the parties has increased by around 30% in the last decade.[6]
The steps towards a free trade agreement can also be interpreted as a new beginning of strengthened relations. In January 2022, India and the EU began attempts to revive negotiations on a free trade agreement and investment protection. However, it is not yet clear what steps will be taken to resolve the disputes over the free trade agreement. The parties differ on issues such as tariffs on cars, alcoholic beverages and dairy products imported from the EU and liberalization of the visa regime for Indian workers entering the EU.[7] However, it is believed that both sides will be more willing to resolve such disputes. This is because the global equation is very different from past negotiations.
If the negotiations are successful, there will be gains in the form of income, employment and prosperity. At the same time, the EU’s geopolitical interests will also benefit. However, in addition to its economic and commercial impact, the process also has a political dimension. On the one hand, the agreement will diversify external economic relations; on the other, it will help both the EU and India to raise their profiles in the Asia-Pacific.[8]
In sum, New Delhi wants to strengthen its ties with the EU for economic and technological modernization and thus become a more effective actor. The EU, on the other hand, tends to improve its relations with India in order to mitigate China’s economic dominance. For this reason, various steps are being taken to make progress in the negotiations, which resumed in 2022 after a failed attempt in 2013. Considering the international conjuncture, it can be predicted that the negotiations will take place in a more harmonious atmosphere this time.
[1] “India, France Discuss Progress on India-EU Trade Pact”, Economic Times, https://economictimes.indiatimes.com/news/economy/foreign-trade/india-france-discuss-progress-on-india-eu-trade-pact/articleshow/99426382.cms?from=mdr, (Date of Accession: 12.04.2023).
[2] “The FTA: A Strategic Call for the EU and India?”, ECFR, https://ecfr.eu/special/what_does_india_think/analysis/the_fta_a_strategic_call_for_the_eu_and_india, (Date of Accession: 12.04.2023).
[3] “EU and India launch Trade and Technology Council”, Politico, https://www.politico.eu/article/eu-and-india-launch-trade-and-technology-council/, (Date of Accession: 12.04.2023).
[4] “EU and India launched the High-Level Dialogue on Trade and Investment”, European Commission, https://policy.trade.ec.europa.eu/news/eu-and-india-launch-high-level-dialogue-trade-and-investment-2021-02-06_en, (Date of Accession: 12.04.2023).
[5] “India”, European Commission, https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/india_en, (Date of Accession: 12.04.2023).
[6] Ibid.
[7] “The FTA: A Strategic…”, op.cit.
[8] “Negotiations on a Free Trade Agreement between India and the EU”, SWP, https://www.swp-berlin.org/10.18449/2023C11/, (Date of Accession: 12.04.2023).
