India Exploring New Chapters of Partnership in Central Europe

by Bhaswati Sarkar - 29 January, 2020, 12:00 3792 Views 0 Comment

End of the Cold War witnessed the bipolar bloc division and politics that defined world order in the post Second World War period replaced by a unipolar world order. For India, which in the bipolar world followed a policy of non-alignment while maintaining a special relation with the Soviet Union and the bloc, this meant major foreign policy shifts, alignments and adjustments. Though India welcomed the transformation that Central and East European region was undergoing, the changes in the region and the disintegration of the Soviet Union was a moment of disorientation. This coupled with the fact that the 1990s was also a period of India’s own economic transformation and the Central European states were geared towards Europe and organisations like the European Union and the NATO meant that Central and Eastern Europe and the CIS states had for all practical purpose gone off India’s foreign policy radar. In other words, while both India and Central European states were reworking their foreign policy they were not looking at each other. However recent moves on the part of both India and the Central European countries indicate some course correction. 

Strong Linkages

India’s relation with Central European countries, Poland, Hungary, Czech Republic and Slovakia has strong foundations. In September 2018 Poland celebrated its 100 years of independence in India by organizing an event in Jamnagar, Gujarat to thank the former Jamnagar king, Maharaja Jam Saheb Digvijay for providing shelter to 1000 Polish children during World War II. Fleeing Nazi atrocities these children came to Jamnagar (then Nava Nagar), which was ruled by the Maharaja. For four years the king not only sheltered them at Sainik School, Balachadi but also ensured that the children grew up around Polish culture, traditions and education. Even before independence the Indian leaders and eminent personalities like Nehru, Bose, Tagore were travelling to the region closely following and commenting on the political developments and great power politics that played out to the run-up of the outbreak of the Second World War. Following independence, India quickly established diplomatic relations with Czechoslovakia, Hungary and Poland, in 1947, 1948 and 1954 respectively. The special relation that India shared with these countries was reflected in the rich tradition of Indology in the region. Way back in 1860 Sanskrit was studied at the 600-year-old Jagellonian University in Krakow and a Sanskrit Chair was established in 1893. In 1932 Indology Department of the Oriental Institute was established at the University of Warsaw. In Hungary, Sanskrit was formally included as a regular subject of study at the ELTE University in 1873. In Prague too, Indology has a very old tradition starting with the establishment of a Chair in Sanskrit in the prestigious Charles University in 1850.

Oskar Lange a recognised Polish economist substantively influenced India’s Second Five-Year Plan, 1956–1961. Czechoslovakia in the initial decades of five-year plans assisted India’s foray in heavy industry. A foundry forge and a heavy machine tool manufacturing plant in Ranchi, a heavy electrical engineering factory at Hyderabad and a high-pressure steam boiler work at Tiruchirapally were all built the Czechoslovak assistance. India, in turn, is remembered with gratitude for the effective role Nehru played during the Hungarian revolution of 1956 to save the life of Dr. Arpad Goncz who subsequently became the President of Hungary from 1990 to 2000.

India & CEE – Addressing the Drift

The systemic collapse and transformation of all four Central European countries resulted in the initial disruption of relations with India. The CEE countries (Visegrad 4) have now steadied with respect to development and economic growth. 2004 all four Central European states secured EU membership and today are among the fastest-growing economies in the Union. Poland, for instance, is today the seventh-largest economy in the EU with a total GDP of €524 billion. It has had an uninterrupted pace of high growth averaging 4.2 percent per annum between 1992-2019 and is steadily catching up with Western Europe. The European Commission projections for economic growth in terms of GDP in 2019 stands at 4.1 percent, 4.6 percent, 2.7 percent and 2.5 percent for Poland, Hungary, Czech and Slovakia respectively. For India’s traditional focus countries France, Germany and the UK the projections are 1.3 percent, 0.4 percent and 1.3 percent respectively. Given this scenario, India’s preoccupation with the big three – the United Kingdom, Germany and France needs an urgent course correction.

Economic Driver

Economic interest is a critical driver of relations between states and this is perhaps true in today’s globalized world as never before. Currently, India’s trade with Poland, Czech Republic, Hungary and Slovakia is far below the potential. This might be on the road to change as all four have over the past few years been looking at India’s economic growth and potential with keen interest and exhibiting clear intent of resetting the existing relation. Given the current economic growth of the CEE, India would do well to respond positively and proactively to the overtures.

Poland as indicated is currently an economic heavy weight in Europe. Polish PM Leszek Miller and PM Donald Tusk paid state visits to India in 2003 and 2010 respectively. In June 2014, India showcased its engineering prowess in the ‘India Show’ at Poznan, Poland. More than 100 Indian engineering companies, mainly from the micro, small and medium enterprise sector participated. One year down the line on 25 March 2015, the ‘Make in India’ campaign was formally launched in Warsaw and in April 2015 Poland’s Deputy Prime Minister Piechocinski announced a ‘Go India’ programme to facilitate and incentivize engagement of Polish companies in India. Incredible India Road Shows in Warsaw and Krakow were also organized to encourage tourism. In 2016, the Polish government identified India as one of Poland’s topmost prospective export markets and twelve priority sectors of the Polish economy as sectors with the potential for international success. These showcase Poland’s strength areas – furniture, fashion, cosmetics, yachts and boats, construction and finishing of buildings materials, machinery and equipment, automotive and aerospace parts, medical equipment, biotechnology and pharmaceuticals. Committed to correcting its trade overdependence on European neighbours the Polish government is looking at increasing its footprint across the globe. In Central Europe, Poland is already India’s largest trading partner. Though in the last ten years, trade between the two countries has grown seven-fold reaching to over 3 billion USD in 2017, this does not reflect the size of the two economies.  Exploring the synergies in areas such as financial and IT services, food and agro-processing technologies and renewable energy is needed to take this relationship forward. In 2018 the launch of Polish Investment and Trade Agency’s (PAIH) Foreign Trade Offices in Mumbai to strengthen economic relations between the two countries and help Indian entrepreneurs discover what Poland has to offer and the launching of much needed direct flights between Warsaw and New Delhi by Polish Airlines LOT in September this year are steps in the right direction. Attempts to establish relations between states and regions of the two countries are likely to deepen relations by a more focused and targeted synergy match. Such relations have been developed between Punjab and Lubelskie region, Andhra Pradesh and Malopolska; and between Maharashtra and Wielkopolska. Similar relations between Uttarakhand and Opole are also under discussion. Polish business delegations are also visiting and promoting business relations in several states, particularly Gujarat and Karnataka. 

The Central European country, which is looking to establish a strategic partnership with India, is the Czech Republic. This was unambiguously stated by the Czech Prime Minister Andrej Babiš in his speech at the Vibrant Gujarat Global Summit in Gandhinagar this year. Some years back in 2011 the Czech government had already identified India among 12 priority countries for promotion of mutual commercial, investment and other economic activities. India–Czech bilateral trade stands currently at $1.6 billion. The two countries share strong defence sector ties. Indian forces are using Tatra trucks for years and Indian airports use radars and surveillance system of the Czechs. This year PBS has signed a contract to produce aircraft engines in India. The Czech automobile industry is well-recognized producing 1.2 million cars. Skoda’s automotive hub is running in Tamil Nadu. Currently, many Indian companies have invested in the Czech Republic in sectors like IT, vehicles, tea, textile, pharmaceutical, auto-components. Indian companies like Infosys, Ashok Leyland, Tata Tea, Alok Industries, Spentex Industries, Motherson Sumi Systems Limited, Glenmark Pharmaceuticals, Lloyd Group, Lloyd Electric and Engineering Ltd., PMP Components Ltd. have a presence in the Czech Republic.

India’s relation with Hungary is also picking up. The Indian official website states ‘Indian investments in Hungary are witnessing an upswing in recent years. Investment flows are spread over several sectors such as IT, pharmaceuticals, power equipment, auto-components and food processing’. It lists Indian companies like TCS, Genpact, Sun Pharma, Crompton Greaves, SMR, Bakony Wipers, Orion, and COSMOS as the major investors in Hungary. Prime Minister Viktor Orban’s visit to India in 2013 has added fresh momentum to the growing relation. Two Indian companies, Apollo Tyres and SMP-Group, carried out the largest green field investments in Hungary in 2014 and 2015. The Sona Group, an established components manufacturer for the automotive industry launched a HUF 4.2 billion project to build a new manufacturing plant in Polgár, Hajdú-Bihar county, Hungary, creating 130 new jobs. In 2016 Peter Szijjarto, Minister of Foreign Affairs and Trade of Hungary said that Hungary was willing to offer incentives, assistance or subsidies in case any Indian companies wished to relocate post-Brexit.

Amongst the V4 India’s connect with Slovakia is relatively slow paced. Slovakia has a strong presence in the car industry, electronics and heavy machinery. These could be prospective areas of interest for India. Indian investments are now gradually moving to Slovakia with a huge contribution by Tata in the automotive sector. Investment of the Jaguar Land Rover has been finalized, bringing the largest Indian-owned personal car plant in Europe. Slovakia has also signed a MoU for cooperation with the Indian Ministry of Railways. This fits in well with the Government of India’s ‘Make in India’ initiative and has opened up a large area for cooperation, including producing coaches for trains, and modernisation of rail systems, including software and hardware.

All four countries are experiencing an acute labour shortage in the past couple of years. A survey in 2019 shows that a third of Hungarian companies were unable to fill vacancies because there were no applicants at all for given positions and another third of employers were having problems as applicants were not sufficiently qualified. Jobs of carpenters, electricians, plumbers, drivers, engineers, doctors, information technology experts and accountants are experiencing a shortfall. Czech Republic, Poland, Slovakia are similarly plagued. India with its labour surplus can explore possibilities of opening regular migration channels with these countries.

Beyond Economics

In the 1990s India – CEE relation was at the most routine if not adrift. India’s hesitant and half-hearted maneuvers stand in sharp contrast to the aggressive way in which China moved into these countries with its 16+1 platform. In India’s foreign policy jigsaw, the CEE did not seem to meaningfully figure.  India does not need to copy China but its needs to play on its strength. India should not lose sight that these countries strongly and unequivocally support India’s UN Security Council membership bid and have also voted for India’s NSG membership. Poland was one of the sponsors of UNSC Resolution 1267 which was to impose sanctions and restrictions on Jaish-e-Muhammad (and its leaders Masood Azhar), a Pakistani organization responsible for the terrorist attack in Pulwama in Indian Kashmir in February this year. Recently in August when the Indian government abrogated Article 370 of the Constitution which accorded special status to Kashmir, Poland, which held the presidency of the United Nations Security Council unambiguously stood by India’s position that Kashmir was a matter to be resolved bilaterally between India and Pakistan defeating Pakistan’s bid to internationalise the issue. A former Polish Ambassador to India has rightly pointed out that India is well known in V4 countries. The old tradition of Indology in these countries as mentioned means that India’s culture, civilization, art and literature are a story that does not need to be told. What perhaps is lacking is systematic knowledge about contemporary India its politics, society, economic strides and opportunities. The need is to take the Indian story forward. The current government under Modi has moved determinedly to showcase India across capitals in the world by prime ministerial visits. However, the Central European capitals have been given a miss. A prime ministerial visit to the region is long overdue and would send an encouraging message to these countries that India values their partnership. In 2019 the first European trip for Indian Foreign Minister S. Jaishankar was to Russia with add-on trips to Hungary and Poland. This was an Indian foreign minister’s official visit to Budapest after 6 years and to Warsaw after 32 years. India-CEE relation has thus been characterized as suffering not just from ‘trade deficit but visit deficit’. India could do well to look at CEE through the V4 platform that is readily available. An oft-repeated argument in discussions is that the Indian foreign desk of 7 looking after 29 European countries is woefully understaffed. For a country, which harbours great power ambitions, this cannot remain unaddressed without causing substantial damage to its aims and objectives. The CEE countries are today eager to build a long lasting partnership with India, it is for India to reciprocate by seizing the opportunity and sealing it.

Bhaswati Sarkar
Author is Professor, Centre for European Studies, School of International Studies, JNU.

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