President Ursula von der Leyen met with Prime Minister Narendra Modi to discuss trade, technology and security.
It’s been 60 years since India accredited its first ambassador to the European Economic Community (EEC), the organisation that served as embryo for the European Union. Back then, India was a protectionist economy trying to move away from the British colonial era while the EEC consisted of just six European countries in the very early stages of market integration.
Today, things look dramatically different: India is a G20 member worth €3 trillion, an emerging global power and the soon-to-be most populous country in human history. It it the largest democracy in the planet and a leading actor in the Indo-Pacific, home to nearly two-thirds of the world’s economy.
India’s enormous political, economic and demographic weight represents an invaluable source of potential for the EU, which, in a similar vein to the United States, is trying to develop a pivot to Asia to act as a counterbalance to China’s towering influence across the region.
“Our values are not shared by everyone. We all see the rising challenges to our open and free societies. This is true for the technological and the economic domain – but it is also true for security,” said Ursula von der Leyen, president of the European Commission, at the end of a two-day visit to India, during which she met with the Prime Minister Narendra Modi and President Ram Nath Kovind.
“The reality is that the core principles that underpin peace and security across the world are at stake. In Asia as well as in Europe,” she told the audience of the Raisina Dialogue, a high-level conference on geopolitics and geo-economics.
The renewed push from Brussels and New Delhi follows two decades of bilateral relations marked by notable ups and downs.
Things were off to a good start in 2000, with the first EU-India summit, and further improved in 2004, when a “strategic partnership” was officially established, but then took a turn for the worse over deep-rooted disagreements related to a draft trade agreement and a controversial case involving an Italian oil tanker and the shooting of two Indian fishermen.
As China began to exert its prowess in a more controlling and assertive manner, both sides realised the benefits of closer cooperation outweighed any sort of outstanding discrepancy.
Rapprochement efforts gradually intensified: in 2020, the EU and India unveiled in a joint roadmap for the next five years, touching upon areas of common concern such as climate change, security, fair trade, human rights research and innovation.
In 2021, the two sides agreed to resume negotiations on the stalled trade deal and launch a dialogue on maritime security, a crucial aspect in Indo-Pacific politics. The EU also set up a connectivity partnership – the second of its kind after Japan’s – to boost investments in energy, transport and digital infrastructure.
These diplomatic achievements were characterised by a surprising level of “detail, depth and richness” that set them apart from previous announcements, said Stefania Benaglia, an associate researcher at the Centre for European Policy Studies (CEPS).
Maritime security and connectivity “are two areas where you really have an investment that kind of paid back, meaning that you have the political statement that was actually accompanied by developments on the ground,” Benaglia, whose work focuses on EU foreign policy and EU-India relations, told Euronews.
“The potential is not only to do a good deal and have an economic gain. The potential is geopolitical, it’s really strategic for both of them.”
Coincidentally, the brand new chapter in EU-India relations has come with a sizable rise in trade of goods, which reached an all-time high figure of €88.1 billion in 2021. Aircraft components, vehicle parts, machinery, oil, pearls and pharmaceutical products are among the most exchanged products.
Foreign direct investment has also steadily increased over the past years, making the bloc one of the largest investors in the country with €83 billion spent between 2000 and 2021. About 4,500 EU companies are present in India and provide more than six million direct and indirect jobs.
A wealth of untapped potential
Casting a shadow over the copious and lucrative commercial links is a plethora of technical barriers, divergent standards and discriminatory measures that, in Brussels’ view, create a restrictive and unfair environment for EU businesses trying to set shop and bid for public tenders in India.
“When the pandemic first hit and we realised there was a big dependency on China, the first immediate reaction should have been: ‘Well, there’s India right next door.’ India could have very well served as the alternative to the Chinese market, offering the same service,” Benaglia said.
“That clearly did not happen. [European] companies did not move out from China to enter the Indian market. It is a completely different dynamic, sometimes very challenging – but not impossible.”
The upcoming trade talks, the first round of which is scheduled to take place in mid-July in New Delhi, is expected to address some of these points of friction although no major breakthrough is expected in the near term as EU negotiations are notoriously technical and lengthy.
To make discussions easier, both sides have agreed to establish a Trade and Technology Council, modelled after the homonymous EU-US forum, to tackle challenges that go beyond national borders.
“Our strategic cooperation should take place at the nexus of trade, trusted technology and security, notably in respect of challenges posed by rival governance models,” said von der Leyen, in a thinly veiled reference to China’s state-run system.
Over the past months, the government of Narendra Modi has showcased a strong desire to expand its foreign trade: the administration has struck trade deals at record speed with the United Arab Emirates (UAE) and Australia, and is working on new ones with the UK, Israel and Canada.
But India doesn’t want to be viewed as an “alternative” market to China but as a standalone regional power, said B. Rahul Kamath, a researcher at the Observer Research Foundation (ORF), a Delhi-based independent think tank.
“India would prefer if Europe looks at India as a new market with significantly high potential for growth and development,” Kamath told Euronews.
“India’s large market size aided by a progressively growing economy not only makes New Delhi a rising economic power but also strengthens its political and diplomatic stature at the international level.”
Besides the successful conclusion of the incipient trade agreement, Kamath noted, both sides should build common ground by working together on health policy, infrastructure and regional security.
“A stronger partnership would allow the EU to increase its engagement in the Indo-Pacific while India could look into increasing its footprint in Central and Eastern Europe, an area in which there has been minimal development,” the researcher said.
‘A difficult balancing act’
The blooming relations between India and the EU – and more broadly, the whole West – recently hit a bump in the road: Russia’s invasion of Ukraine.
Ever since the war broke out, the EU and the US have been rallying their allies to harshly condemn Russia’s unprovoked aggression and synchronise an unprecedented raft of international sanctions.
The joint campaign has so far yielded limited results, attracting only advanced economies with a consolidated democratic system: the UK, Norway, Japan, South Korea, Australia, New Zealand and, in a stunning break from its neutrality tradition, Switzerland.
While India has called an “immediate cessation of violence” and offered its help to secure a ceasefire, it has refrained from condemning the invasion and imposing equivalent sanctions. Notably, the country decided to abstain on two key United Nations votes: one to censure Russia for its military actions and another to suspend its membership from the Human Rights Council.
The equidistant position has won Moscow’s praise for “taking this situation in the entirety of facts, not just in a one-sided way” but visibly ruffled India’s Western partners.
In a rare public rebuke, US President Joe Biden called India’s stance “somewhat shaky” as compared to the other two members of the so-called Quad, Japan and Australia.In her Raisina speech, Ursula von der Leyen avoided direct criticism but evoked the horrors of the Bucha massacre to urge “all members of the international community” to support the West’s diplomatic efforts.
“The outcome of Putin’s war will not only determine the future of Europe but also deeply affect the Indo-Pacific region and the rest of the world,” von der Leyen said. “For the Indo-Pacific it is as important as for Europe that borders are respected. And that spheres of influence are rejected.”
India’s balancing act, experts say, responds to the country’s inherent suspicion to anything that appears to resemble Western imperialismand a fixation to maintain a non-aligned and independent foreign policy whose main purpose is to serve the government’s domestic agenda and ensure the nations’ prosperity.
Instead of embracing the us-versus-them mentality that often makes it way into Washington’s thinking, New Delhi has opted for a more inclusive, growth-driven approach to foster ties with a great host of countries that, in some instances, may be hostile towards each other.
Maintaining healthy links with Russia is an important piece of a bigger geopolitical puzzle that also includes China and Pakistan, two neighbours that have been involved in border skirmishes with India.
These military tensions weight heavily on India-Russia relations: Russia is India’s largest supplier of major arms, accounting for over 46% of all the weapons New Delhi bought between 2017 and 2021, down from 69% during the 2012-16 period.
Overall, India is the world’s largest buyer of arms: the country purchases about 11% of all traded weapons around the world, according to a new report by the Stockholm International Peace Research Institute (SIPRI).
“For India, it is quite crucial to balance its relationship with the West – the United States and Europe – in which it has invested a lot in recent times,” Dr. Garima Mohan, a fellow in the Asia program of the German Marshall Fund, told Euronews.
“Its partnership with Russia is at this point a very one-note relationship focused largely on military and defence equipment for which India is critically dependent on Russia, therefore it cannot afford to completely alienate the country. It’s a difficult balancing act for the Indian government.”
India’s noncommittal position on the war shouldn’t be seen as “antagonistic” or “opposed” to the Western united front, Mohan said, noting the Modi government has provided humanitarian aid to Ukraine via Poland.
But in a move set to further exacerbate the West’s frustration, Indian companies have begun to ramp up purchases of Russian oil after Moscow offered a discount of $35 per barrel. According to an estimation released by Reuters, India has bought at least 40 million barrels since the start of the Ukraine war – more than twice as much as it bought in the whole of 2021.
The country “is trying to preserve whatever remnants of leverage New Delhi has with Moscow, with the full understanding that the China-Russia relationship is changing,” Mohan said.
“India also wants to play the role of a responsible actor globally. So it will be mindful of the relation and the trading it does with Russia and, of course, the impact of sanctions.”