India - EU Relations [UPSC IR Notes]

In 2022, India and the European Union celebrated 60 years of their bilateral relationship by re-launching talks on the bilateral trade agreement. A recent visit to Brussels by the Union Commerce Minister Piyush Goyal boosted the momentum on fast-tracking the negotiations and provided a platform for India to discuss sensitive issues with the European Union including market access barriers.

India – EU Relations

India-European Union relations date to the early 1960s, and India was among the first countries to establish diplomatic relations with the European Economic Community.

• In 2004, the relation was upgraded to that of a ‘Strategic Partnership’ at the 5th India – EU Summit.
• The first India-EU Summit took place in Lisbon, Portugal in 2000.
• As the world’s two largest democracies, the EU and India share a commitment to protecting and promoting human rights, a rules-based global order, effective multilateralism, sustainable development and open trade.
• India and the EU also interact regularly at the Foreign Ministers’ level.

India-EU Trade Relations

The European Union is India’s third largest trading partner accounting for 10.8% of total trade in goods and in the last decade trade in goods between India and the EU grew by 30%.

• India has a positive trade balance with the European Union with respect to agri-food exports.
• Trade in services between India and the EU was around €30.4 billion in 2020.
• There is a significant rise in foreign investments from the European Union which amounted to €87.3 billion in 2020. 
• India accounts for 2.1% of the EU’s total trade in goods and is lagging behind China and the US whose share is around 16.2% and 14.7% respectively.
• The recent visit (May 2023) by the Union Minister of Commerce provides an opportunity for business-to-business interactions across a wide range of sectors such as food and beverages, technology, chemicals, automobiles and auto components, textile chemicals, metals and steel. 

Issues in India-EU Trade Partnership:

• The European Union has raised concerns related to high tariffs imposed by India in various sectors like dairy, alcoholic beverages, automobiles and auto components.
• Meanwhile, Indian businesses have raised concerns about regulatory issues such as high technical standards and carbon tax imposed by the European Union.
• India and the European Union also have different views over several issues such as the content of investment agreements, intellectual property rights and ways to tackle the climate change challenge.

Way Forward:

• The India-EU Trade and Technology Council (TTC) can serve as a platform to address divergence of views and reach a consensus.
• India and the EU can also utilize forums where they are participating such as the World Trade Organization (WTO) and G20.
• The Minister’s visit will help in identifying common areas of interest between the European Union and India and can also gain support from European Union for its G20 priority areas such as
  • Inclusive and growth-oriented trade
  • Resilient global value chains (GVCs)
  • Integrating micro, small and medium enterprises (MSMEs) in global supply chains by using digital platforms
  • Logistics for trade
  • WTO reforms
• India and the European Union have already agreed to jointly work on common priorities in the context of WTO reforms such as dispute resolution mechanism, subsidies on agriculture and fisheries and an e-commerce moratorium.
• Bilateral trade and investment flows can be enhanced through joint capacity-building programs for supporting MSME integration with global value chains, support to startups, joint research, and joint project on sustainable food systems.
• In order to address the issue related to technical standards and the mobility of professionals, India and the European Union can enhance collaboration between regulatory bodies and mutual recognition agreements.

India – EU Relations:- Download PDF Here