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Insights into Editorial: India should believe in the EU



In a new initiative to revive talks on a free trade agreement that have been suspended since 2013, the two sides of India and European Union announced a “high level dialogue” to try and take the Bilateral Trade and Investment Agreement (BTIA) forward.

India and the European Union committed to a framework for strategic cooperation until 2025, and vowed to cooperate on their response to the coronavirus pandemic, and at the United Nations Security Council.

“India and the E.U. are natural partners,” said Mr. Modi in his opening remarks.

Our partnership is important for global peace and stability, and this reality is clearer given the situation around the world.

PM also referred to shared “universal values” of democracy, pluralism, inclusivity, respect for international institutions and multilateralism between India and the E.U.

About European Union:

The European Union is a group of 28 countries that operate as a cohesive economic and political block.

19 of these countries use EURO as their official currency. 9 EU members (Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania, Sweden, and the United Kingdom) do not use the euro.

The EU grew out of a desire to form a single European political entity to end centuries of warfare among European countries that culminated with World War II and decimated much of the continent.

The EU has developed an internal single market through a standardised system of laws that apply in all member states in matters, where members have agreed to act as one.

The EU and India:

In today’s fragmented world, the power of any aspiring global player depends on the number and quality of its bilateral and multilateral relationships. In which partner should India invest? The European Union (EU) is one.

The EU and India have much in common. Both aim to enhance strategic autonomy and their global standing.

Diversifying strategic value chains is also a common interest, as is the urgent need to address climate change. The EU and India can support each other in these endeavours.

Trade between EU and India:

  1. On purely economic terms, the EU is India’s first trading partner and the biggest foreign investor, with €67.7 billion worth of investments made in 2018, equal to 22% of total FDI inflows.
  2. But there is still room for improvement especially when compared to EU investments in China which, in the same year, amounted to €175.3 billion.
  3. Enhanced business cooperation can help both the EU and India diversify their strategic value chains and reduce economic dependency notably on China.
  4. India could succeed in attracting EU investment that might be moving out of China, but to do so, it must address the mutual trust deficit.
  5. Facilitating people’s mobility and connectivity is a good way to improve mutual understanding and create opportunities for innovation and growth.

Talks on FTA between EU and India:

The EU and India must also tackle the elephant in the room: the stagnating Free Trade Agreement (FTA) negotiations.

A new study from the European Parliament assesses the potential impact of an EU-India trade agreement at between €8 billion and €8.5 billion gains from increased trade for both sides, with a more significant increase of trade gains likely to flow to India.

The study also refers to additional potential gains from enhanced coordination on the provision of global public goods, such as environmental standards.

On climate change, the EU is building on its ambitious target to render the continent carbon-emission neutral by 2050, through its new industrial strategy, the Green Deal.

“Investing in fossil fuel-driven recovery is a wasted opportunity, and we only have one chance to make it right”, says the Executive Vice President of the European Commission.

Opportunities for India:

Political conditions are favourable for India especially after the withdrawal of the United Kingdom.

The Europeans recognise India’s role in helping provide peace and prosperity in the Indo-Pacific. They see great potential in working together on technologies and issues of the future.

But India is not the only economic alternative for Europe in the aftermath of COVID-19. So, in order for India to attract these shifting companies, it has to do one of the following

  1. The Broad-based Trade and Investment Agreement has to be put back on track.
  2. Conclude a new investment agreement, we have to join in high-technology collaboration including 5G and artificial intelligence, we may be able to align our stars.

This will require imagination from our side. Europe will also need to change its positions on trade in goods and be ready to accommodate India on services.

Ruptures caused by COVID-19:

  1. The ruptures caused by COVID-19 have been the occasion for the EU to prove its worth.
  2. The measures put in place at supranational level show a strong willingness to buttress the fundamental pillars on which the EU is built.
  3. The “Next generation EU proposal” submitted by the European Commission has surprised many by its bold approach.
  4. This is indeed a game-changer, not only in its financial implications as it allows the EU to take on debt but because it shows that the ties that bind the EU extend well beyond treaties and individual members’ self-interest.
  5. But the value of the EU reaches far beyond its economic clout. The EU champions the rules-based international order, which is being increasingly challenged by the proliferation of exceptionalism.


Evolution of EU has roots in looking for an integration of divided Europe because of excessive nationalism over a long period of time which also witnessed two world wars.

It has played an important role in improving economic conditions and raising living standard of people in weaker members of group.

Should both the EU and India succeed in transforming into carbon-neutral economies by 2050, we all would gain from the investment.

The EU and India must join forces to promote sustainable reform of multilateral institutions, with the World Trade Organization (WTO) first in line.

Hence, a strong partnership would help both EU and India become global decision-makers.


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