Why the EU has its eye on India

The EU is preparing to host India to discuss a new trade and investment deal, but New Delhi is only one of several key emerging markets in the sights of Brussels with its goal of making Europe stronger in the world.

Also on the European radar are other key developing giants, from China and Africa, where this more prominent EU international policy stance is taking root. However, it is India that is the immediate focus ahead of the summit on May 8.

Portuguese Prime Minister António Costa says the summit is the foreign policy “jewel in the crown” of his nation’s 2021 presidency of the EU. He wants to rejuvenate talks between Brussels and New Delhi on negotiations for a trade and investment agreement, plus enhancing cooperation in connectivity from energy to digital and transport.

One concrete manifestation of these connectivity ambitions are proposals for New Delhi and Brussels to co-build infrastructure projects globally to counter China’s Belt and Road Initiative. On the wider connectivity agenda, there are growing signals that Europe and India will work more closely together to establish open and transparent standards for 5G given the amount of investment both powers are spending in this area. The EU needs to invest about $355 billion and India over $70 billion to build their 5G networks.

This agenda includes not just rollout but also establishment of global security standards, as concerns grow in some quarters about Chinese telecom companies. Such standards include agreeing on technical aspects like radio spectrum bands and interface technologies to be used by 5G networks and creating level-playing fields for local and smaller companies.

One further example of collaboration is sustainability. Growing initiatives with India in this area include the EU-India Clean Energy and Climate Partnership on clean energy transition and efficiency, smart grids and grid integration, storage, and sustainable finance.

The EU at just under 450 million in population is already India’s biggest trading partner, and wants to turbocharge ties further with the 1.3 billion population emerging markets giant. There are several key reasons why Europe and India get on well. They are the world’s two largest democracies, and continental Europe is India’s largest single trade and investment partner, which is why a trade deal is a key prize for both parties.

Critical as Asia-Pacific is to Europe’s future, other key emerging market nations are also key to EU ambitions.

Andrew Hammond

There are wider reasons too behind converging interests, including a growing need to develop shared defense forums, including for maritime security in the Indian Ocean where 40 percent of bilateral trade passes.

While India is therefore a preeminent EU target in Asia-Pacific, it is by no means the only one. This was illustrated in Europe’s new strategy for cooperation with the region, approved recently by the EuropeanCouncil, which advocates stability and an “open and fair” environment for trade and investment.

The approximately 1.3 billion population of China is also on the radar here, despite the chilliness in ties that is driving Brussels closer to New Delhi. Top of the EU-China agenda is a new Comprehensive Agreement on Investment which, while agreed last December, has yet to be ratified, and has run into challenges due to European sanctions imposed after alleged human rights and forced labor violations related to Xinjiang Uighurs.

Critical as Asia-Pacific is to Europe’s future, other key emerging market nations are also key to EU ambitions. A good example is the approximately 1.2 billion population African continent which has assumed priority foreign policy focus in Brussels.

In recent years, there has been an EU “pivot to Africa” which has led to a new alliance based increasingly on investment rather than aid. Brussels increasingly sees itself as a counterweight in the continent to other prominent world powers, and wants to encourage Africa as a champion of the EU’s rules-based, multilateral approach to world order. In the words of EU High Representative for Foreign Affairs Josep Borrell, what is being developed is “a new, integrated strategy for and with Africa” that sees “equal partnership” rather than the “power politics” perceived to be offered by others such as the US and Russia.

Another reason for Europe’s designation of Africa as a super-priority is the continent’s economic growth potential. The IMF asserts for instance that Africa’s overall growth prospects in the 2020s will be among the best in the world, with an increasing number of dynamic developing countries.

This underlines that, while India is a massive opportunity for Europe, it is just one of several key emerging market targets for Brussels. From Asia-Pacific to Africa, fast-growing developing nations are becoming a major post-Brexit foreign policy priority for the 27-member bloc to try to steal a march on other major powers to drive economic and political advantage in the 2020s.