EU Cannot 'Neglect' India Any More Thanks to Trump

Raised US tariffs has brought the two parties together, writes former foreign secretary Krishnan Srinivasan.

Prime Minister Narendra Modi and President of the European Commission Ursula von der Leyen prior to a meeting in New Delhi on Friday, 28 February.

(Photo: PTI)

The recent visit of European Commission President Ursula von der Leyen, along with 22 out of 27 commissioners (heads of departments) to India, has brought into focus the relationship between two important global entities, this time against the backdrop of US President Trump and his close advisers having evidenced little sympathy for Europe as a strategic or economic transatlantic partner.

It is hard to resist the conclusion that the apprehension in both the EU and India of raised US tariffs has spurred this visit and brought the two parties together.

The EU, riven by internal discord, its population fearful of losing jobs, pensions, and its comfortable lifestyle to immigrants, and loss of manufacturing and technology to China, as well as the steep rise of the political far-right across the continent, finds itself obliged to strengthen ties with previously neglected partners.

Talking Past Each Other

Despite high level of dialogue and repeated meetings – there have been 15 India-EU Summits thus far – the India-EU relationship has lacked substance mainly due to the EU’s preoccupation with the US and China, and its failure to acknowledge India’s status as a pole in an evolving multi-polar world.

Academic Gauri Khandekar has correctly described the relationship as a "loveless arranged marriage … between a well-matched couple but with no spark of chemistry.”

Affinities have not so far translated into intimacy. Blame for the lack of entente is shared equally between the EU and India. Despite the commonalities of being the biggest democracies and unions of over two dozen linguistically, culturally and ethnically diverse states, neither side has sought a mutual special relationship. India, with a population of 1.45 billion and the fifth largest GDP at $4.2 trillion had felt undervalued in the EU’s priorities compared to China, Japan, and the transatlantic alliance.

While India seeks a stronger stake in the international community, for the EU, its foreign policy in India so far has been trade policy, leaving bilateral cooperation in political, strategic and cultural issues far from optimal.

The EU represents a continent difficult to define; whether it is a super-state, a supra-national entity or a post-modern institution is open for discussion.

Economically strong and politically weak, it has no centre of authority and no fixed territory; its geographical, administrative, economic and cultural boundaries diverge, and its plethora of forums produce miniscule outcomes.

On the one hand the EU represents itself; on the other it represents its 27 members. It is a major importer and exporter, and a lifestyle superpower. Its international policies are articulated and implemented bilaterally by a handful of its strongest members, which leaves the EU itself as an organisation concerned with subsidiary non-traditional threats like illegal migration, drug trafficking, and cybercrime.

It has the instruments pertaining to a major power, but its cumbersome bureaucracy lacks the internal cohesion to assume that status, and its value as a geostrategic player has diminished sharply with the Ukraine War and its current divergences with Trump’s America.

India, on the Other Hand...

India has a diversity of human talent, originality and spirituality, and the best demographics of any large economy. The average Indian is about half as young as the average European. The number of Indians watching televised cricket matches exceeds the collective consumer class of Europe and the US.

Despite poverty, inequality and illiteracy, over 950 million are entitled to vote in India’s disorderly democracy. India would be interested in the EU’s quest for social justice, integration, modernisation and the knowledge economy, while the EU could benefit from engagement on global issues, human security, social development, capacity building and sub-national governance.

Both are stakeholders in maritime security, against terrorism and drug trafficking, but the EU-India partnership remains a top-down, bureaucrat-driven relationship and India finds it hard to see value in the EU as opposed to bilateral ties with its major constituents.

India differs from the EU on UN and financial institution reform, Myanmar, Ukraine, Sri Lanka and many WTO issues, though previous differences on climate change and non-proliferation have been narrowed down.

As an older democracy than many EU members, India resents the EU's hectoring and moral pretensions and is affronted when even small EU states like the Baltics and Nordics choose to talk down to India on human rights, the role of NGOs, and international law.

The EU’s highly securitised visa policy adds another dimension to its low profile in India. The EU embassy (called the Delegation) in India’s capital is known only to a few development activists and some NGOs, and there are few specialists on the EU to be found in Indian academia. Similar is the case in the EU about India.

Different Approaches

At the UN and international forums, India and the EU have not found common ground on many issues. With two European countries already permanent members in the Security Council and yet another (Germany) seeking membership, Europe is greatly over-represented, whereas Latin America, Africa and Asia (other than China) have none.

In the international institutions, and leadership of the World Bank and IMF, the situation is the same, and the shareholding, management and control is reflective of the past colonial era.

Europe is an adherent of the existing status quo or the post-modern world of norms, whereas India today represents power, realism and has greater faith in institutions like BRICS. The ‘strategic partnership’ with the EU has remained without mutual benefit; civilian ‘soft’ power is not esteemed highly in New Delhi corridors, and India views normative power as akin to soft imperialism.

As former EU president de Rompuy put it, “Until now we had strategic partners, now we also need a strategy.” In the field of defence procurement, the EU has to contend with an entrenched Russia and growing shares in India for the US and Israel, but India’s objective is to avoid over-dependence on any one country. France is considered a reliable partner and the deployment of Rafale jets has been noteworthy. Other nations like Britain, Italy, Germany and Sweden have also made more modest supplies.

Trade and Investment

Both parties are basically service economies. Europe is the second largest market for ICT services and accounts for about 30 percent of Indian ICT exports. Indian professionals received the largest share — more than 20 percent — of EU Blue Cards issued in 2023-24 which, unlike the US Green Cards, give right of residence but do not automatically lead to citizenship.

Multinational companies look for cost-effective employees and Europe is the third destination after the US and Canda for qualified Indians. However, the Indian diaspora in Europe has not yet attained the sociopolitical power in Europe that it has in North America though its numbers are growing and amount to about three million, well over half located in Britain.

India-EU statistics for 2023 show total trade at €124 billion, with Indian exports at €65 billion and imports at €48 billion. Indian investment outflows to the EU were valued at approximately $40 billion for the period April 2000 to March 2024.

Trade in services was €60 billion and EU investment in India totaled €108 billion – less than EU’s stakes in China or Brazil, but 6,000 EU companies had a presence in India. The EU’s economic profile in India is mainly that of Britain, Germany and France. Europe is a big and important market for India, but for Europe India is only 2.2 percent of its total trade.

Trade Agreement

The history of the Bilateral and Investment Agreement (BTIA, by which the Free Trade Agreement was officially known), discussed over the past 18 years, might well be a record in the history of infructuous negotiations. The recent visit by von der Leyen has resulted in yet another of the many missed timelines for its conclusion.

Meetings have just taken place on artificial intelligence and semiconductors, green hydrogen, digital and strategic technologies, clean and green technologies, trade, investments and resilient supply chains, sustainable urbanisation, water management, defence, and space, and yet the main stumbling blocks of the past still need to be overcome; Europe feels India is insufficiently entrepreneurial and that its market is over-protected.

From the EU side, objections refer to high Indian tariffs on wines, spirits and cars, transparency in taxation, removal of equity caps, stronger intellectual property regime, freeing agricultural trade and opening the services sector, especially in law and accounting and norms for public procurement. India requires the EU to ease visa curbs for professionals and lower tariffs on Indian drugs, pharma and high carbon goods like steel, aluminium and cement. Other Indian complaints relate to non-tariff barriers such as labour and environment standards.

The intention now is to rapidly conclude agreements on free trade, investment protection and geographical indications (quality control); as von der Leyen has declared, “Now more than ever the geopolitical context asks for decisive action.”

It remains to be seen whether the required decisive action, after nearly two decades, will be forthcoming. When the BTIA is concluded, it will be a significant achievement in bilateral relations and will need approval by each of the EU’s member states which is expected to take about two years.

The Future of India-EU Ties

The EU’s eurocentricity and transatlantic fixation have to give way, not least under the current pressure from Trump’s US, to greater receptivity to the Global South’s rising economies – India important among them. Demand growth and spending power is shifting to countries like India with its high growth rate, and its share in the global investment portfolio will rise sharply.

The per capita disparity will mean there is price sensitivity in the Indian market, which will require to be closely analyzed in Europe and have a bearing on the future of the European industry and manufacture. Europe’s consumer market is the biggest unified market in the world, which makes it attractive for Indian higher value goods and services, and investments abroad which are bound to grow.

Due its close links with Europe from the seventeenth century onwards, India, its culture and its traditional products, enjoy considerable brand recognition in Europe, and its soft power and potential are widely acknowledged. Europe is preachy but non-intrusive, and neither Europe nor India have reason to feel threatened by the other.

In the multipolar world, India and Europe constitute two poles and they should cooperate more closely in making this come about.

(Krishnan Srinivasan is a former Foreign Secretary of India. This is an opinion piece. The views expressed above are the author’s own. The Quint neither endorses nor is responsible for them.)