Modi's Brussels visit essential for India-EU ties

The announcement of Prime Minister Narendra Modi's visit to Brussels for the India-EU Summit on March 30 has been greeted with satisfaction and anticipation as it comes after a gap of four years. The long hiatus is indicative of disarray that has beset bilateral ties in recent years.

Strategic Partnership between India and the EU was established in 2004, four years after the decision to hold annual summits. There was considerable enthusiasm when this visionary document was consolidated. It was followed by a Joint Action Plan in 2005 and launch of negotiations for India-EU Bilateral Trade and Investment Agreement (BTIA) in 2007. India had then set an ambitious target of two years to complete negotiations. No one had visualised that talks would drag on for nine years with no end in sight.

Crisis

Modi's visit to Brussels will impart fresh impetus to BTIA negotiations as also on bilateral relations in political, security, strategic and developmental areas.

Strategic partnership has failed to realise the promise it was initially visualised with. It has continued to lose momentum over last several years, particularly since 2009. The EU was plagued by international financial crisis followed by the Eurozone debt crisis in Iceland, Greece, Ireland and Portugal. Other developments on international scene like Arab Spring, conflict in Ukraine, rise of Islamic State and refugee influx from the Middle East and North Africa induced paralysis in its decision making.

India was riddled with scams like 2G, CWG, Coalgate, along with the inability of the government to take decisions or fresh initiatives, rapid decline in economic growth to below five per cent levels in 2013 etc. This was responsible for lack of focus on bilateral engagements with EU during the UPA-II rule.

Contrary to expectations, the relations did not witness a revival after the NDA government came to power. Modi met EU leaders on sidelines of G20 summits in Brisbane and Antalya in 2014 and 2015 respectively.

Modi's proposed visit to Brussels in April 2015 did not materialise on account of reported objections by Federica Mogherini, EU foreign affairs and security chief. Mogherini was foreign minister of Italy before moving to Brussels and was against receiving Modi because of the ongoing case against two Italian marines.

Discussions on BTIA were to resume in August last year but were called off by India at the last minute due to unjustified ban by EU on sale of around 700 pharma products for alleged manipulation of clinical trials by Indian companies.

India protested because most of these drugs have been in the market for many years "without any adverse report from any member state".

Trade

EU-28 was India's largest trading partner in 2014. Total bilateral trade during 2014 was 95.51 billion euros. India's exports were 48.21 billion euros and imports 47.33 billion euros.

Trade during first nine months of 2015 stood at 58.9 billion euros comprising of exports worth 30.3 billion euros and imports of 28.6 billion. Share of India's trade with the EU in the EU's total trade has been consistently declining since 1996-97.

The EU is one of India's largest sources of FDI with inflows valued at five billion euros in 2014. After 16 rounds of talks, negotiations on BTIA are currently stranded in disputes over the EU's demands to raise equity cap on FDI in India's insurance sector, reducing tariffs on imports of automobiles and auto-components, lowering barriers on imports of wines and spirits, protection of intellectual property rights (IPR), etc.

Demands

India seeks greater access for its services sector. It is concerned that the EU's demand for stricter implementation of IPR rules might affect its generic pharma industry. India is also concerned about the UK's recent move to hike visa fees for skilled professionals. India's demand for granting "data secure status" by the EU also needs to be resolved amicably.

Differences are expected to be narrowed during the visit. Recently India has unilaterally undertaken several reforms such as allowing 49 per cent foreign investment in insurance and pension, easing of foreign investment norms in banking, defence and railways sectors.

Hundred per cent FDI in telecom and single-brand retail, and 51 per cent in multi-brand retail has been allowed. After signing of Trans Pacific Partnership Agreement recently, it is imperative for India and the EU to conclude negotiations on BTIA expeditiously.

India is the fastest growing economy with GDP growth of 7.6 per cent in the current year. India has launched several significant initiatives like Make in India, Smart Cities, Digital India, Skill India, etc, which should be of considerable interest to the EU.

To provide heft to bilateral engagements, it is essential to further enhance collaborations in strategic areas like counterterrorism, science and technology, climate change, education, green technology, research and innovation, maritime security, Afghanistan, etc.

(Courtesy of Mail Today.)