Resetting India’s relations with Europe

China recently came away from years of negotiations with Europe with a big prize – an investment deal which grants it privileged access to the EU’s wealthy markets. India is lagging behind China in terms of trade negotiations. However, 2021 heralds great geopolitical change and thus offers India a valuable opportunity to reset its relationship with Europe.

For the Economic Times of India

I wonder how the British Prime Minister, Boris Johnson, felt about his visit to India, which was due to take place this January.

Was he looking forward to forging a better relationship with Mr Modi?

Or was he dreading standing in the early morning fog among the VIPs, inspecting the Republic Day parade, as India commemorates its independence from the British empire?

Mr Johnson likes to see himself as something of a liberation fighter, having battled for years to take Britain out of the European Union.

Post Brexit, he wants the UK to deepen its friendships around the world, based on common interests. India, as a major Asian power, appears an ideal country with which to develop closer ties. 

Sadly, Mr Johnson’s trip to India has been cancelled, not for diplomatic reasons, but because of the coronavirus crisis, which has cost more than 70,000 lives in the UK. The death toll is rising, even though a vaccination programme is underway. 

During a strict national lockdown, long-distance travel by the prime minister is out of the question. When Mr Johnson recently took a solo cycle road for a few miles around London, the tabloid newspapers portrayed him as a clown.

A long trip to Asia would cause uproar in the press, although the Prime Minister did shuttle backwards and forwards to Brussels in December for several socially-distanced meetings with the European Commission to “get Brexit done.”

Mr Johnson will have an opportunity to meet Mr Modi later in 2021, when Britain hosts the Group of Seven summit meeting. I expect it will take place in June and it will almost certainly be an online conference, rather than a face-to-face event in London, because of coronavirus restrictions. 

India is not a member of the G7 but it will join the meeting as one of the so-called D10 democracies. The leaders of South Korea and Australia are also invited in that capacity.

Officially, the British are billing the event as an opportunity to “deliver the prime minister’s ambition to work with a group of like-minded democracies to advance shared interests and tackle common challenges.”

In terms of geopolitics, I believe that the greatest challenge is the rivalry between the United States and China.

The UK is helping America to build a broad alliance against China’s growing influence, which is why it is courting India as a quasi-ally.

Mr Johnson has described India “as a key player in the Indo-Pacific region, and an increasingly indispensable partner for the United Kingdom as we work to boost jobs and growth, confront shared threats to our security and protect our planet.”

Other G7 members, such as Japan and the United States, are enthusiastic about standing up to China and so is Australia. Those countries, along with India, make up the informal security pact known as the Quad, which Donald Trump boosted during his time in the White House.

The Quad may well expand and formalise during Joe Biden’s administration. However, the new president faces a daunting set of domestic problems. I believe he will therefore struggle to draw up a comprehensive foreign policy strategy to overcome the havoc reaped by Trump. I also think that China will make life difficult for Mr Biden. 

Germany, Italy and South Korea were not great Trump supporters and they are also being more circumspect on China. Business leaders ask why a political tiff with China should hinder trade with a nation whose economy is a rare beacon of growth during a global recession?

Chancellor Angela Merkel recognises the close connection between Germany’s prestige and China’s economic growth.

For that reason, she pressed the EU to sign an investment deal with China in December 2020, against the objections of the French and several other countries, which expressed concern over China’s human rights record in Hong Kong, Tibet and Xinzhen.

I expect that the diplomats gathering around Joe Biden in Washington were frustrated that the EU went ahead with its China investment deal, without agreeing a common approach with the United States. However, recent events in Washington have diminished America’s influence. 

So what is next for India’s relationship with European Union? Can it take a leaf out of China’s book and boost business and investment with the bloc as a whole? There are many sectors in which India and the EU have scope for closer cooperation, such as technology and healthcare.

Even though the EU and India have expressed interest in closer trade ties, there has not been much tangible progress. A free trade agreement (FTA) has been under discussion since 2007. One of its principle stumbling blocks is India’s call for less rigorous visa restrictions for its citizens who travel to the EU for study and work.

The visa issue was always a contentious point with Conservative governments in the UK, who craved their own independent immigration and visa policies. With Britain out of the EU, there may be fresh scope for India to negotiate. 

The EU is already India’s largest trading partner, accounting for about eleven per cent of total Indian trade. But there is a major imbalance, as India remains only the EU’s tenth largest trading partner, with just 1.9 per cent of the EU’s total trade in goods in 2019. 

In recent years, many Indian companies have used Britain as an entry point into the European market. Post Brexit, that portal will need to be replaced. 

India needs to forge a new type of relationship with the EU.

This will not be easy. Indian diplomats recognise the enormous challenges of engaging with the EU’s institutions. Its political system is cumbersome, the decision-making process is slow and there is inconsistency among its member states’ approach towards the Indo-Pacific. 

China has noted this division and exploited it to its advantage.

Most EU countries are looking for strategic partners and allies in the Asian region. That opens the way to dialogue for India, however complicated.

Boris Johnson is an expert in talking to Europe, having spent many hours in Brussels and on Zoom negotiating with its leaders. However, I doubt that Mr Modi will ask Mr Johnson for statesman-like advice, given the pain and division associated with Brexit.

Perhaps instead, India should study the Chinese approach.

China has convinced the Europeans that their controversial investment deal creates a “win-win” outcome for both sides. 

Yet China has a deep problem with trust – as India well knows.

And in talking with the EU, China is reaching out across a great divide of political ideas.

So I recommend that the Indians start by reminding their European friends that they understand and respect democracy. On that promising foundation, I think their relationship has great potential. 

Duncan Bartlett is the Editor of Asian Affairs magazine and a Research Fellow at SOAS China Institute, University of London. He is a former European Business Reporter for the BBC in Brussels. 

Related Posts