As leaders of the two largest democracies, the EU (European Union) and India convened over an online conference on 8th May 2021, the commitment to promote and protect human rights, a global order emphasizing the rule of law, operative and constructive multilateralism, sustainable development and open trade got reinforced. The two sovereign institutions have come a long way since 2000, when the first India-EU summit took place. The year 2004 marked the signing of a strategic partnership between the two democracies, which has since then, intensified into international co-operation on various fronts – the field of multilateralism, economic partnerships and interactions on furthering the aim of sustainable development (to name a few).
The key focus of this year’s summit was on a) Building global health preparedness and resilience, in light of the COVID-19 pandemic, b) achieving a new impetus for EU-India trade, c) protecting our planet and fostering green growth and d) launching a connectivity partnership. This article shall set the context, discuss relevant facts and deliberate on the concern areas between the two sovereigns.
Concerns on Covid-19
The EU-India summit took place when the surge in COVID-19 cases was at its peak in India and as such, the EU responded by mobilising an initial emergency funding to the tune of 2.2 million euros to help India battle the pandemic. Whilst this support was laudable and need of the hour, two months later, both institutions had to grapple with a related operational issue.
The EU Digital COVID Certificate (Certificate) acts as digital proof that a person is at a lower risk of contracting COVID-19. The concern triggered with Indian vaccines Covishield and Covaxin, not receiving approval by the European Medicines Agency (EMA). Consequently, Indians travelling to EU had restrictions on free movement with the requirement to quarantine themselves. This led to India’s stand on not exempting EU citizens from mandatory quarantine, despite possessing the Certificate. India had to engage with individual member states in order to validate Covishield as proof of immunity. As of writing this article, 18 European nations have accepted Covishield as proof of immunity and India has accordingly reciprocated thereafter, however, this engagement has been time-consuming and could have been avoided in the first place. India desires to have the CoWIN certificates accepted by the EMA, in line with the Certificate, irrespective of the vaccine inoculated though vaccine Covaxin has not received emergency approval by the WHO. It would be better for both institutions to diplomatically resolve this issue and fast-track the vaccine related compliances in order to facilitate trade and travel cementing the relationship further.
Concerns on Commerce
The EU accounts for 11.1% of India’s trade in 2020 and 14% of India’s exports. From the EU’s perspective, India amounts to 1.8% of EU’s total goods trade, lesser than that of UK (12.2%), the USA (15.2%) and China (16.1%). Whilst India has received a significant 75.8 billion euros in the form of FDI (foreign direct investment) from the EU, it is far lesser when compared to that of China (197.8 billion euros) or Brazil (318.7 billion euros).
Another area of concern for the partnership between the two sovereigns is commerce. Bilateral Trade and Investment Agreement (BTIA) based negotiations were initiated in 2007, but due to unresolved issues ended in a deadlock in 2013. Apart from Latvia and Lithuania, who have bilateral investment treaties (BIT) with India, BIT with dozens of EU nations were terminated after investors started seeking compensation for alleged violation of existing investment treaties. Issues pertaining to liberalization of Indian tariffs on goods such as automobiles, dairy products, spirits and wine; liberalization of services, especially in the accounting and legal sector, limited public procurement access in India are yet to be resolved.
A European Parliamentary Research Service study in 2020 observed that even a partial liberalization of India-EU trade could substantially boost trade, to the tune of 52-56%, as far as exports from the EU to India is concerned and 33-35% in imports from India. The estimated gain therefrom could be around 8-8.5 billion euros.
Concerns on Connectivity
India and EU have committed to building a sustainable and comprehensive connectivity partnership in the EU-India summit. EU and India have identified sectors that would deliver mutual benefits, should connectivity be bolstered. One among such sectors is the digital space, which has faced a challenge between the institutions.
The EU does not consider India as a data secure country. Even though India has a draft personal data protection bill under discussion and deliberation in Parliament, questions have been raised on areas such as data localization and data surveillance. Similarly, in 2019, the EU had initiated a dispute in the World Trade Organization against India for charging duties on import of certain goods in the information and technology sector that exceeded the bound rate of 0% set in India’s schedule. India and EU having identified digital connectivity as a mutually beneficial sector and India, must actively consider incorporating changes that are necessary to ease out the differences between the two institutions.
Concerns on Climate
Both India and the EU have been active in adopting, cleaner, renewable sources of energy. While the EU has undertaken efforts to decarbonize and shift from a fossil fuel-based economy to a carbon neutral based economy (the EU aims to achieve carbon neutrality by 2050), fossil fuels continue to be a major source for the generation of energy or for transport in India. As a signatory to the Paris Agreement as well as the International Solar Alliance, India is also significantly stepping up its efforts to transition to a greener economy.
Nations such as India, Brazil, South Africa and China have been against the concept of EU’s carbon tax. Imports to EU could be expensive if said levy is imposed on products, the manufacturing of which, would result in a higher carbon footprint. Experts are unsure as to how the EU plans to assess the extent of emissions by an imported product. Furthermore, there are concerns that smaller businesses would find it difficult to quantify the emissions and comply with the said regulations. These nations would have to plan for a greener by design model to encourage production that results in lesser carbon footprint, which per se could entail time and investment and hence, would require the EU’s co-operation.
India and the EU have a lot in common and this makes their partnership symbolic and special. While it is true that there could be certain open areas to be thawed out, a larger consensus can always be worked out with reasonable compromise and deliberations fostering mutual trust as an essence to the way forward. Both have a lot to learn and implement from each other and if they commit to an approach which supports mutual growth and the world economy at large, these teething concerns could effectively be mitigated.