India And EU, Areas Of Cooperation and Challenges

Context: Recently, the European Commission, led by President Ursula von der Leyen, visited New Delhi.

Areas Of Cooperation between India And EU

Historical Ties

• Diplomatic relations were established in 1962 with the European Economic Community.
• Upgraded to a Strategic Partnership in 2004 at the 5th India-EU Summit.

Institutional Cooperation

• 15 India-EU Summits have been held so far, first in 2000 (Lisbon).
• India-EU Strategic Partnership: Roadmap to 2025, adopted in 2020.
• India-EU Trade and Technology Council (TTC) was established in 2022, focusing on trade, technology, and security.

Trade & Investments

• EU is India’s largest trading partner in goods.
• Bilateral trade (FY 2023-24):
  • Goods: $135 billion (Exports: $76B, Imports: $59B).
  • Services: $53 billion (Exports: $30B, Imports: $23B).
• EU FDI in India (April 2000 – Sept 2024): $117.4 billion (16.6% of total FDI).
• Indian FDI in the EU: $40.04 billion (April 2000 – March 2024).
• Ongoing Free Trade Agreement (FTA) negotiations.

Technology Cooperation

• Science & Technology Cooperation Agreement (2007).
• India-EU Intent of Cooperation in High-Performance Computing (HPC) (2022).
• Semiconductor R&D MoU signed in 2023.
• EU participation in the Global Partnership on AI Summit (2023).

Green Energy Collaboration

• India-EU Green Hydrogen Cooperation Initiative.
• India was the exclusive partner at the European Hydrogen Week (2024).
• European Investment Bank pledged €1 billion for India’s hydrogen projects.

People-to-People Ties

• 20% of EU Blue Cards (2023-24) issued to Indian professionals.
• 6,000+ Erasmus scholarships awarded to Indian students in 20 years.
• 2,700+ Indian researchers funded under Marie Sklodowska-Curie Actions.

Defence & Security

• Maritime security cooperation under the ESIWA+ programme.
• First joint naval exercise (2023) in the Gulf of Guinea.
• Collaboration on global security, piracy, counterterrorism, and disaster relief.

Space Cooperation

• ISRO launched EU’s PROBA-3 mission (Dec 2024).
• ISRO-ESA cooperation in Chandrayaan-3 and Aditya-L1 missions.
• Signed MoU for Gaganyaan mission cooperation.

Challenges in India-EU Relations

Carbon Border Adjustment Mechanism (CBAM)

• The EU’s carbon tax on imports from high-emission industries (like steel) has raised concerns for India, which views it as a trade barrier.
• This could impact 0.05% of India’s GDP (Centre for Science and Environment).

General Data Protection Regulation (GDPR)

• India’s data protection laws differ significantly from the EU’s stringent GDPR framework, affecting cross-border data flows.
• India’s demand for data localization and digital sovereignty has created friction with the EU’s open internet policies.

Prolonged FTA Negotiations

• Differences on digital regulations, bilateral investment treaties, dispute resolution mechanisms, and investor protection have delayed the Free Trade Agreement (FTA).
• The Bilateral Trade and Investment Agreement (BTIA) negotiations (2007-2013) remained dormant until 2021.

Divergences in Geopolitical Perspectives

• Ukraine Conflict: The EU has strongly opposed Russia’s invasion of Ukraine, while India has maintained a neutral stance due to its energy and defense ties with Russia. This divergence affects strategic trust.
• China Policy Differences: While both India and the EU view China’s rise with caution, the EU’s economic engagement with China remains significant, creating a strategic gap in Indo-Pacific cooperation.

Defense and Security Cooperation Limits

• Unlike India’s deep defense ties with the US, France, and Russia, EU-India defense cooperation remains underdeveloped due to the EU’s decentralized defense policies.
• Maritime Security Gaps: While the EU has increased its presence in the Indo-Pacific, it lacks a unified defence policy, making security cooperation with India less effective.

Visa and Mobility Restrictions

• The EU’s restrictive visa policies for Indian professionals, especially under the Blue Card scheme, limit mobility despite India’s skilled workforce demand in Europe.
• While scholarships like Erasmus exist, bureaucratic hurdles often deter Indian students from studying in EU countries.

Lack of Cohesion in EU Policies

The EU operates as a bloc of 27 member states, each with its own policies. India often finds it easier to engage bilaterally with key European nations (France, Germany) rather than with the EU as a whole.

Ethical Disparities

• Divergences on labour laws, human rights, and environmental standards create hurdles for EU investments in India.
• • Eg., India’s strategic autonomy, such as restrictions on Amnesty International, has also been a point of contention.

Way Forward for Strengthening India-EU Relations

• Fast-Track FTA Negotiations: Both sides should resolve differences on digital regulations, investment protection, and trade barriers to finalize the Free Trade Agreement (FTA) for boosting economic ties.
• Enhance Green & Technology Cooperation: Strengthening collaboration in renewable energy, green hydrogen, and high-tech sectors can align with the EU’s sustainability goals and India’s technological ambitions.
• Deepen Security & Maritime Collaboration: Expanding joint naval exercises and structured defense dialogues can enhance India-EU cooperation in the Indo-Pacific.
• Facilitate Talent & Mobility Exchange: Simplifying visa rules under the EU Blue Card scheme and improving work-study opportunities for Indian professionals and students can strengthen people-to-people ties.
• Strengthen Bilateral Engagements Within the EU: While engaging with the EU as a bloc, India should deepen strategic partnerships with key EU nations like France and Germany to accelerate trade and investment cooperation.

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