Highlights of the EU – India relationship
India and the European Union have often been referred to as natural partners. Both entities emerge from highly multicultural environments and share core values such as upholding democracy, effective multilateralism and prosperity. As an emerging power in the Indo-Pacific, India can serve as a valuable alternative trading partner in its quest for diversification and achieving strategic autonomy, offering the EU access to a vast and expanding market. In return, the EU can provide India with critical investments, access to its single market and the technology required to further develop its economy.
India was officially recognised as a strategic partner by Brussels in 2004. After almost a decade under a coalition of the Congress Party and the United Progressive Alliance (UPA) the election of Narendra Modi and the rise of his Bharatiya Janata Party (BJP) in 2014 marked a geopolitical shift, signalling a different dynamic in light of Modi’s ambition to make India a global leader.
Under Modi’s leadership, India has primarily been focused on consolidating its outreach and presence in South Asia through its “Neighbourhood First” policy, strengthening ties with the countries of the South Asian subcontinent. This strategy was instaurated as a complement to the country’s “Look East” (towards Southeast Asia) and “Look West” (towards the Middle East) policies and enabled India to consolidate its position on a regional scale, subsequently turning its attention to other parts of the world, including the EU.
Since 2014, the EU and India have considerably strengthened their cooperation in various domains such as trade, climate, energy, and even military security. Furthermore, at the end of 2018, the EU adopted its strategy vis-à-vis India, aimed at strengthening their strategic partnership, focusing on sustainable modernisation and collaboration in a multilateral context.
Since 2022, negotiations for an EU-India Free Trade Agreement (FTA) have resumed. This renewed interest and revitalization of their economic partnership can be partly attributed to Brexit, which ended the United Kingdom’s (UK) role as India’s strategic gateway to the European market. As trade relations between India and the EU took a steep flight after Brexit, without the UK serving as an intermediary, India has been impelled to pursue direct trade relations and agreements with the EU. For instance, between 2019 and 2022, EU-India Bilateral Trade in Services registered an increase by 48%. By 2023, the EU had become India’s largest trading partner, with total trade between the two parties reaching 124 billion EUR, or 12.2% of India’s total trade. This puts the EU ahead of the United States (10.8%) and China (10.5%) as India’s leading trading partner. However, despite the completion of nine negotiation rounds by September 2024, the FTA discussions have stagnated. Key sticking points include disagreements over sustainability measures, clean energy development, public procurement and human rights.
In the field of security and defence, the two parties have engaged in several cooperation initiatives such as the 2018 ESIWA project (Enhancing Security cooperation In and With Asia), the CRIMARIO II (Critical Maritime Routes in the Indo-Pacific Project) partnership, and the EUNAVFOR (European Union Naval Force) Operation ATALANTA aimed at deterring piracy and drug traffic in the Horn of Africa. In addition to ensuring freedom of navigation in South and Southeast Asia, the EU and India are also working together in the fields of cybersecurity, space security and the defence industry. Furthermore, in October 2023, India and the EU carried out their first naval exercise in the Gulf of Guinea.
These initiatives demonstrate not only the increasing importance of the Indo-Pacific for the EU and India, they also underline a European effort to establish itself as a credible cooperation and security actor in the region. As a result, it will be beneficial for the EU to advance its relations with India and to foster a closer partnership with this emerging power in the Indian Ocean.
Why India matters to the EU
The outcomes of the Indian and European elections present an opportunity for the two partners to strengthen their relations, not only in the economic field but also concerning regional security and social affairs. Yet, why are the EU’s relations with India of importance and how can both parties benefit to the fullest from this partnership? The answer is threefold.
Firstly, the European Union has strong reasons to advance its relationship with India, primarily due to the country’s economic growth and the vast market it represents. According to the World Bank, India was one of the fastest growing economies in 2024 and is projected to achieve high middle-income status by 2047. This growth is expected to be accompanied by a significant expansion of the Indian market, fueled by governmental initiatives in infrastructure and manufacturing. In return, the EU can provide India with the technology, investments and market access it needs to drive its economy further forward. Access to the EU could also enable New Delhi to advance its import diversification strategy, which concerns sectors such as energy, electronics and, more recently, defence. Notably, throughout 2024 India has reinforced its relations with both Paris and Berlin in the field of defence.
Secondly, in addition to excelling in sectors such as business services, information technology, and pharmaceuticals, India has been promoting growth in green technology, electronics, and textiles. This diversification and economic expansion present valuable opportunities for the EU and its companies, enabling them to share expertise while gaining access to the Indian market and its increasingly competitive labour force. European investments in India could also expedite job creation and help reduce unemployment, which is already positively developing. Such collaboration could foster a virtuous cycle of progress characterised by digitalisation, financial inclusion, formalisation, and industrialisation. At the same time, it could address the challenges faced by the 129 million Indians living in extreme poverty (earning less than 2.15 USD per day), thereby improving livelihoods and supporting sustainable development.
Thirdly, maintaining a good relationship with India is relevant given the country’s geostrategic position. Indeed, critical European sea lines of communications (SLOCs) cross the Indian Ocean, through which 35% of its trade with Asia passes by. For this reason, ensuring security and stability in the Indian Ocean is an absolute necessity for Europe to secure its trade and supply chains.
In reaction to the growing presence of the Chinese Navy in its nearby waters, India expressed its intention in 2017 to actively develop its maritime capacities, presenting an ambitious order portfolio. Growing its fleet from slightly less than 140 warships at the time, the Indian Navy’s objective is to be able to deploy 200 operational units by 2027. While India aspires to maintain its role as a net security provider in the region, its aim to withstand China’s naval expansion by its own means and resources represents a major challenge. Aware of the changing dynamics in the Indian Ocean, India has actively sought to strengthen its partnerships with key international players. These include the United States, Japan and Australia in the framework of the Quadrilateral Security Dialogue (Quad), as well as the European Union and its Member States, which are promoting collaboration in maritime security and related areas through initiatives like ESIWA, CRIMARIO II and NAVFOR.
Key Challenges Ahead for the EU-India Partnership
Although Modi’s India seems to be overflowing with potential and opportunities, its relations with the EU may still face some important challenges.
First of all, the two partners seem to have diverging views on the content and scope of their relationship and how to shape it. On the one hand, the EU promotes a comprehensive partnership that includes growing trade relations, exchange of know-how, as well as security and defence cooperation. The European Union, being India’s most important trading partner, ranking before the United States and China, also fostered high expectations of Modi’s government to align itself with key EU external policies, such as regarding the war in Ukraine. Moreover, even if Delhi were to promulgate partnerships, it continues to avoid fostering solid alliances.
This important distinction in India’s external engagements allows New Delhi to continue to pursue its own interests, aligning its policies accordingly. For S. Jaishankar, India’s Minister of External Affairs, it is essential to position India as a pivotal link in the Western Indo-Pacific strategy aimed at counterbalancing the People’s Republic of China (PRC). In his book Strategies for an Uncertain World, he explains that “by maintaining a strong posture there, India’s value rises” (p.185). On the other hand, even if New Delhi sees Beijing as a competitor, it also considers the PRC as an example to follow on the path of development. The Asian giant is seen as “the first non-Western power to seriously rise in the post-1945 era, has drawn on its cultural heritage to project its responsibility and shape the narrative. It is but logical that India too should follow suit” (p.47). To this logic, Jaishankar adds that through a partnership with its neighbour, an opportunity could emerge to counterweight the Western powers, despite their disagreements and territorial disputes along the border. Overall, this multi-alignment strategy enables Delhi to achieve its so-called “strategic autonomy.”
Furthermore, even though India as a nation holds great potential, it still faces vital challenges and internal dysfunctions due to the lagging quality of its infrastructures, which will be essential in enhancing economic growth. The country continues to grapple with significant challenges across the healthcare, transportation, and social infrastructure sectors, including education and health services. For instance, it has been facing problems such as urban flooding after heavy rains and inadequate waste management. In 2022, on average approximately one bridge collapsed every month. As a result, productivity bottlenecks have emerged, making India less attractive for potential European investors. This problem is even more real in the 23 major Indian ports experiencing serious congestion issues. For 2023, cargo faced an average 51,6 hours turnaround time. In comparison, in 2021, turnaround time at the Port of Antwerp was approximately 12 hours for all vessel types.
By addressing these infrastructure bottlenecks, as well as logistics challenges, there could be a real opportunity to strengthen stability on the South Asian subcontinent and encourage stronger engagement from the EU and other partners. This could also potentially enhance the prospects for a successful FTA with the EU.
Nonetheless, certain aspects of New Delhi’s domestic policies have been raising concerns and may hamper the EU’s involvement in India, notably in the field of human rights and the BJP’s position on religious freedoms. Narendra Modi’s party asserts that India’s identity should be more aligned with the concept of a Hindu nation, raising concerns about the status of religious minorities. Following his re-election in 2019, the government introduced controversial policies that critics say have disproportionately affected Muslim communities, transgressing their rights and freedoms. Reports have also surfaced of incidents targeting minority groups, with some suggesting the involvement of local security forces.
Furthermore, as religious minorities are increasingly targeted by the BJP policies, this is also the case for the predominantly Christian population in the Northeastern states of India (Manipur, Mizoram, Meghalaya, Nagaland). For instance, since 2023 government policies have intensified the violence in India’s northeastern state of Manipur.
Human Rights Watch pointed at Narendra Modi’s 2024 electoral campaign to have been fueled by hate speeches. Closely following the situation, the European Parliament passed a resolution in January 2024 calling for an enhanced human rights dialogue with India. Respect for these values and fundamental rights is a prerequisite for the EU in concluding trade or development agreements with partner countries, especially given the requirement for the European Parliament to approve the negotiated EU trade deals. This presents a dilemma for the EU between upholding the credibility of the European Union as a normative power in the region and gaining access to a promising and rapidly growing Indian market and its precious natural resources.
The EU and India usually hold bi-annual high-level meetings, where human rights concerns are regularly discussed, even though the last one was held in 2022. Amnesty International issued a few recommendations for the EU on topics to be addressed in their high-level dialogue with India. These included ending the “bulldozer justice”, increasing the accountability of security forces in human rights violations, and the suppression of laws used to repress minorities.
What is next for EU-India Relations?
Following the 2024 Indian and European elections, the dilemma facing EU diplomacy has become more eminent. The European Union is set to deepen its relations with India, whose market could offer tangible opportunities in terms of trade and supply of natural resources. Strengthening economic relations could also contribute to poverty alleviation among the Indian population and start a virtuous circle. Furthermore, from a geostrategic point of view, the economic rise of India could be a response to the EU’s need for more import diversification in its de-risking effort and quest for greater strategic autonomy.
Nonetheless, addressing certain pressing matters remains essential. First and foremost, the European Union must thoroughly comprehend the nuances of India’s foreign policy and its vision of strategic autonomy. Given cultural distinctions, interpretations of shared values may diverge. This necessitates not only a deeper understanding of the bilateral relationship but also an appreciation of how each side perceives its wider strategic environment. In particular, mutual insights into each other’s relationship with China and Russia will be vital, as well as the rationale behind them. Such an approach will enable the EU to gain a more accurate understanding of India’s foreign policy approach, as mutual comprehension cannot be achieved through the lens of one’s own perspective.
Regarding more pragmatic matters, one of the EU’s main objectives should be to make progress in the negotiations on the free trade agreement, of which clauses to be included in the Trade and Sustainable Development Chapter (TSD) have raised the most concerns, besides public procurement. The country’s agricultural sector—which sustains about 18% of the world’s population—faces various shortcomings, in addition to its heavy reliance on fossil fuels for industrial operations and energy production. With these sectors likely to expand under the FTA, India’s greenhouse gas emissions are expected to increase, further deteriorating the country’s already poor air quality. In this regard, the Institute for European Environment Policy (IEEP), already advised in March 2024 to upgrade the Paris Agreement by including new provisions and articles focusing on areas such as wastewater treatment, water management plans, and chemical-free farming methods. Additionally, facilitating access to climate investment or deploying the EU’s capacity-building resources will be essential to effectively support Indian stakeholders through their green energy transition.
It will be essential for the EU to acknowledge that the opportunities the Indian market can offer are plausible and can be realised to their full potential by the Indian government through major investments in hard and soft infrastructure, as well as in the social domain (universal access to health care, education and food security) and regarding human rights. These measures are essential to overcome productivity bottlenecks and to create a more attractive environment for foreign investors. This opportunity also depends on the extent to which India is able to mobilise its industrial force.
Taking into account the EU’s considerations and concerns, as well as the dilemma it has been facing in balancing its values with economic and political gains, the EU has maintained some cautiousness in its engagement with India, which has been pursuing its own interests, thereby avoiding becoming part of any integrated alliance system. In such a framework, it will be key for the two partners to collaborate following a win-win logic reaping mutual benefits. Despite India’s substantial development, growth and market potential, the EU will need to define and follow its own red lines while forging the conclusion of a strong Free Trade Agreement focused on mutual gains, thereby addressing disagreements over sustainability, clean energy development, human rights and public procurement. The opportunities are there, the challenge lies in finding common ground between the two partners.
Author: Loïc Vanleeuw, EIAS Junor Researcher
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