Why in news?
India and the EU have many things in common. And there are many areas in which both can expand the cooperation.
- Both aim to enhance strategic autonomy and their global standing.
- Diversifying strategic value chains is also a common interest.
- Both seek to address the issue of climate change on an urgent basis.
Economic ties with the EU
- The EU is India’s largest trading partner accounting for €80 billion worth of trade in goods in 2019.
- This is equal to 11.1% of total Indian trade.
- The EU is also the biggest foreign investor, with €67.7 billion worth of investments made in 2018.
- Which is equal to 22% of total FDI inflows.
Scope for improving the economic ties
- The EU’s investments in China amounted to €175.3 billion (2018).
- So, India could succeed in attracting EU investment that might be moving out of China.
- To attract this outflowing investment, India must address the mutual trust deficit.
- Enhanced business cooperation can help both the EU and India diversify their strategic value chains.
- Increasing people’s mobility and connectivity is another area that can create opportunities for innovation and growth.
Talks on FTA
- Both sides need to move further on the Free Trade Agreement.
- A new study from the European Parliament estimates the impact of an EU-India trade agreement between €8 billion and €8.5 billion.
- The study also mentions additional potential gains from enhanced coordination on the provision of global public goods, such as environmental standards.
Cooperation on climate change
- Under the new industrial strategy, the Green Deal, the EU has set an ambitious target to be carbon-emission neutral by 2050.
- If the EU and India succeed in transforming into carbon-neutral economies by 2050, we all would gain from the investment.
Strategic partnership with EU
- The Indo-Pacific region is becoming contentious, so India should capitalise on its geopolitical leverage there.
- Cooperation with like-minded, democratic powers can support this effort, especially towards assertive competitors like China.
- The EU as a whole offers more to India than the strongest bilateral relations with individual EU member state.
- New Delhi must learn how to maximise benefits from this strategic partnership.
- The disruption caused by COVID-19 has been the occasion for the EU to prove its worth.
- “Next-generation EU proposal” submitted by the European Commission has economic as well as geopolitical implications.
- The proposal shows that the ties that bind the EU extend well beyond treaties and individual members’ self-interest.
- The EU champions the rules-based international order, so the EU and India must act to promote sustainable reform of multilateral institutions starting from the WTO.