A new indispensable power 

News: Recently, the British Prime Minister Boris Johnson’s visited India. Further, the president of the European Commission is scheduled to visit India in the coming days. Therefore, India-EU relations become the centre of debate 

What are the various challenges for India to increase its integration with the EU?

The EU comprises a mammoth bureaucracy. It is highly complex. Therefore, it is more difficult to conclude an agreement 

The biggest hurdle to a deeper economic relationship has consistently been regulatory divergences. Both the EU and India have taken its decisions in different administrative silos. 

There are other differences on multiple regulatory and economic fronts. For example, differences from digital regulation to intellectual property to phytosanitary requirements 

At present, there is a lack of institutional basis for EU-India co-operation. This derails the regulatory convergence and economic integration between India and the EU.  

India’ trade negotiations face challenges from multiple quarters like lobbies and class interests. For example, the legal services firms in India do not want to have foreign competition.  

India’s primary concern is market access for labour-intensive sectors and favourable investment conditions. 

What is the importance of the European Union wrt India’s interest and vice-versa?  

In the post-Brexit era, the European Union (EU) might be more vital for Indian economic interests. The United States seems to be more inward-looking. 

India aims to enhance its trade engagement with the world. India has recently signed a free trade deal with Australia. India-Britain also wishes to conclude free trade agreement by the end of 2022. The trade deal with the EU is also in pipeline 

India needs investment for the government’s aspirational National Infrastructure Pipeline etc. The public funds in India are not sufficient to build infrastructure necessary to make the Indian economy environmentally sustainable, globally integrated, and competitive. Europe is the world’s major reserve of institutional capital, and if India is to address its investment deficit, then convergence between the two economies is vital.  

The EU needs India to partner with the EU on climate action and on Indo-Pacific connectivity. Fortunately, these desires are also very much in India’s interest. 

The EU is a regulatory superpower. It was the first mover on data privacy and on corralling the revenues from Big Tech. It can be beneficial for India in improving regulatory regime 

The EU will be influential for catalysing green finance. It can play a role in regulating new technological frontiers in sectors like energy.  

The Way Forward 

An India-EU Trade and Technology Council could thus fill a long-identified gap. It will be on the line of a new “trade and technology council” established by the EU and the US to coordinate approaches to key global trade and technology issues”.

Source: The post is based on an article “A new indispensable power” published in the Business Standard on 24th April 2022.