It is evident that India-EU relations fell short of their potential, and there is recognition for its careful nurturing.
India and the European Union are on the cusp of a historic realignment based on strategic interests and shared values. The inflection point benefits from the conclusion of the Broad-based Trade and Investment Agreement (BTIA) and collaboration in future-oriented areas such as technology, energy, sustainability, defence, space, and mobility. BTIA will have a profound influence on trade and investment, economic activity and regulatory framework, while strategic cooperation will balance geopolitics and geoeconomics.
India and the EU had established summit-level interaction in 2000, and relations were upgraded to a strategic partnership in 2004. Despite a high-level understanding, progress on the EU track lagged behind India’s close bilateral ties with major European powers.
Lengthy negotiations
Negotiations for BTIA, launched in 2007, had slow progress and were paused in 2014. The EU had prioritised investments in the faster-growing Chinese market and championed WTO provisions expanding trade defence. India’s relatively small GDP and trade share, at that time, limited its leverage. But much had changed by 2021, when negotiations resumed, and the two sides saw benefit in meeting halfway for consensus on difficult issues. Political will for BTIA, supported by industry’s need for resilient supply chains, pushed for a new framework. Externally, China’s economic coercion, supply chain disruptions and acquisition of strategic assets had dimmed its lure. In contrast, India’s growth story was compelling and could not be ignored. Distress in the multilateral system and an ineffective WTO led India and the EU to negotiate several bilateral FTAs. Shifting geopolitics and geoeconomics demanded a robust partnership between India, the largest democracy and emerging power and EU, the bastion of high technology, regulatory framework and capital. Last year’s developments jolted strategic balance and multilateralism, hastening the India-EU consensus that was underway.
Strategic orientation
The state visit of European Council President António Luís Santos da Costa and European Commission President Ursula von der Leyen will set the stage for agreements on key components of the strategic partnership.
