April 03, 2015

Narendra Modi visit of Europe could be a Watershed Moment for India-European Union relations

Continuing the thrust on improving and reenergizing India’s foreign relations, Narendra Modi will embark on his Europe and Canada tour in April. This visit will include France, Germany and Canada. This is in line with “link west” policy of government of India.  Narendra Modi will arrive in France on April 9 and will stay there for two days before going to Germany on April 12. From there, he will proceed to Canada. The Prime Minister was also scheduled visit Brussels, The seat of European parliament but the plan was cancelled after the European Union failed to respond to India's proposal for setting a date for India-EU summit in time. European Union is India’s second largest trading partner however Europe's contribution to India's overall global trade has been shrinking even while the Indian economy grows. Here is an analysis of present state of affairs between India and EU and why this visit was needed. 


Narendra Modi has been as the man who gets the things done. Since assuming the responsibility of transforming India, he has been seeking avenues within and outside of India. He has accelerated the Indian growth which has invited very encouraging remarks from world leaders including Barak Obama and most recently IMF Chief Christine Lagarde who was full of praise for our sound policy decisions. India's growing economy presents enormous opportunities for the world, European Union in particular. The India-European Union relations have been cordial for most part except in the recent times. EU adopted a resolution seeking return of Italian marines to Italy. It was not received well in India. Subsequently Indian leaders refused to meet a European delegation as they see delaying of India-EU meet as a snub. Furthermore, Brussels the seat of EU was dropped from Modi’s Europe itinerary.
But, many smaller European countries have expressed their unhappiness over dropping of Brussels from Modi’s travel itinerary as they see it as a lost opportunity for providing the much-needed boost to India-EU ties, which were witnessing a slowdown after their negotiations for an economic pact showed no progress due to differences on various issues.

It is a visit that can usher a new phase in India’s relations with the two giant economies of Europe. In preparation for the visit the foreign secretary has also visited Europe. 

Narendra Modi Itinerary in France and Canada

Prime Minister Modi will arrive in France on April 9 and will remain there until April 11. While in France, he will interact with country's political leadership that includes a meeting with President Francois Hollande.
In Germany, PM Modi is expected to inaugurate the Hannover Messe 2015 fair in which India is a partner country. He will also meet German Chancellor Angela Merkel on April 12. Germany is the eighth largest foreign direct investor in India. German FDI in India during the period 1991-2014 was valued at $7.57 billion. It is certainly below the potential of the relationship.
The Prime Minister will be in Canada from April 14 to 16, making stops in Toronto, Ottawa and Vancouver. Canada is home to over a million people of Indian origin mostly settled in greater Toronto and Vancouver areas. Commenting on India-Canada relations, the Canadian Prime Minister Stephen Harper said, “Canada and India enjoy a close friendship based on shared values of democracy, pluralism and a mutual interest in expanding trade.

On Agenda with France and Germany
Ø With France our bilateral relationship is based on space, defence and strategic ties.
India is seeking closure to 23-billion $ Dassault Rafale fighter deal and an early works agreement with Areva on the Jaitapur nuclear power project in return for critical “Make in India” defence technologies and a joint venture for making large forgings for civilian nuclear reactors.

With Germany, our focus is giving a push for skill development programs and deepening of economic ties. 

Points to watch out for in relations with European Union

The Free Trade Agreements between India and European Union

Trade between India and the EU stood at $101.5 billion in 2013-14 and it was $57.25 billion during April-October 2015, according to Indian government figures.
The European Union is very eager to clinch a free trade agreement with India.
Geoffrey Van Orden, chairman of the European parliament delegation for relations with India is very optimistic about Narendra Modi’s leadership. He said, “I think Modi is a man who wants to get things done”
Tariffs cut on Cars, Wines and Spirits from Europe
The EU is very keen to get access to India’ burgeoning markets and wants India to cut tariffs on cars, wines and spirits from Europe.
India says it is ready to consider some reduction of taxes on car components. On wines and spirits, the taxes imposed by the centre are low but when tariffs levied by states are added on, the prices become unviable for the EU.
India wants fewer restriction on Indian working in Europe
India wants fewer restrictions on the temporary movement of its nationals working in Europe.
Another sticking point has been that the EU wants India to recognize 200 geographical indications—labels used on products that specify their geographical origins.
Other Areas of Opportunities
The EU on its part had agreed not to oppose Indian generic drugs on the basis of patents.
 European Investors would be closely watching the progress of key Indian legislation such as the amended land acquisition act, the insurance bill and the goods and services tax as a test of India’s commitment to improving the ease of doing business. Investors were also hoping for clarity in the government’s policy towards multi-brand retail.
Evolving an understanding on key issues like climate change and changing dynamics of Middle East, South China Sea and Ukrainian crisis.

Potential and Limitations
India’s increasing clout in world trade on account of its reinvigorated economy has made it inevitable for EU to have a good relook at its relations, both economic and somewhat strategic as well. India's increasing role in the geopolitics of the Indian Ocean, and especially in the security of the Gulf, the source of much of Europe's energy has made it a very important player. On both the fronts, there is a lot of room for enhanced co-operation.

India-EU relations as of this moment lack substance and strategic weight. The Eurozone crisis has been an impediment too in increasing India’s confidence in EU. EU so far doesn’t add much value to India’s strategic and Economic aspirations. . India’s refusal to tow the lines of the west in Ukrainian crisis has also been an impediment in the relationship
India has rightly stressed on enhancing ties with individual members so far. It is not the EU but the existing European permanent members, the UK and France, which bring more value to the table for India. Germany could add new dimensions to it. Now, it seems to set for a change. We hope that that this visit of Modi will shift the gears of our European engagements as well just like what he has done with the economy. 

Note: This article written by me was originally published on a portal on Prime Minister of India Narendra Modi

You can find my profile at : http://thekarmayogi.com/team_member/sachin-diwakar/

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