An assessment of EU-India ties as Modi visits Europe: Sheer political will driving strategic convergence beyond differences
During a media conference last month in Washington post the 2+2 meeting, India’s external affairs minister S Jaishankar was at the receiving end of one more question on India’s buying of Russian energy, prompting him to quip: “We do buy some energy which is necessary for our energy security. But I suspect, looking at the figures, probably our total purchases for the month would be less than what Europe does in an afternoon.” The minister wasn’t bluffing. Europe, especially Germany, is effectively bankrolling Putin’s war.
Since Putin’s decision to launch an invasion, the Ukraine issue has been a persistent thorn in the flesh of rapidly energizing India-EU ties that saw a ‘reset’ last year with the EU-India leaders’ meet in May. Prime minister Narendra Modi had joined in through video conference to meet heads of 27 EU member states assembled in Porto, and that epochal moment not only resurrected the stillborn FTA negotiation process, it had also marked a moment when both sides turned serious about the relationship. Yet the persistent background noise on divergence over Ukraine has threatened to overshadow some real progress on the ground.
During the recently held Raising Dialogue in New Delhi, in response to questions from the Norwegian and Luxembourg foreign ministers on this very topic, the external affairs minister’s response was sharp. “When a rules-based order was under challenge in Asia, the advice we got from Europe is: do more trade. At least we are not giving you that advice,” said Jaishankar, adding that Ukraine could be a “wake-up call for Europe to also look at Asia.” India won’t forget that in 2020, the very year when 20 Indian soldiers were killed by Chinese troops in Galwan, Europe and China signed the Comprehensive Agreement on Investment that was driven largely by Xi Jinping and then German chancellor Angela Merkel.
In a joint statement, this is unusual. These sentences are the result of prolonged and meticulous deliberations that last for days and are released only when consensus has been reached. So, it is not an oversight, but rather an evidence of divergence on both sides.
Yet, significant as it is, the real story unfolding before our eyes is the intensifying partnership between India and the EU beyond the discord, which in an earlier time could have messed up the trajectory of ties. Differences tend to get played up. Notwithstanding the Ukraine war — a development that is causing tectonic shifts in global geopolitics — New Delhi and Brussels are showing political will, determination and maturity in not letting differences over one issue disturb the tempo that is moving towards rapid formalisation of the partnership.
Modi’s ongoing visit to Europe, his engagement with the continent’s powerhouses in Germany and France and his attention toward Europe’s Scandinavian subregions are but one dimension of the evolving multi-faceted, multi-dimensional relationship. It features from both sides an ambitious agenda of cooperation spread across trade and investment, emerging technology, connectivity, climate action, green and digital transition, health, defence, maritime security, space, skill development, renewable energy, green infrastructure, Arctic, circular economy, water management and many more domains.
Consider the gamut of the prime minister’s visit. In his three-day tour of Europe, Modi first held bilateral talks with German chancellor Scholz and co-chaired the sixth edition of IGC where his Cabinet colleagues — Union finance minister N Sitharaman, foreign minister Jaishankar were also in attendance along with national security advisor Ajit Doval. From there, Modi went to Copenhagen at the invitation of Danish PM Mette Frederiksen to review the progress of the India-Denmark Green Strategic Partnership, participated in the India-Nordic Summit hosted by Denmark, and held bilateral meetings with the heads of all other Nordic states — Iceland, Norway, Sweden and Finland. In return, Modi is scheduled for a brief stopover in France where he will meet the reelected French prime minister, Emmanuel Macron, to review the strategic partnership.
Over the span of this tour, the prime minister has lined up “about two dozen engagements across approximately 65 hours” reported Indian Express, which includes bilateral and multilateral meetings with world leaders from seven countries and interaction with about 50 global business leaders.
The fruits are visible. The Ukraine rhetoric from Europe has been subdued and at least in the European leadership and policy circles that deal with India, there is increased understanding of New Delhi’s position and compulsions.
While Modi’s visit covers Germany and France, the commercial and strategic engines of Europe, he has recalibrated India’s foreign policy priorities, gone beyond New Delhi’s template focus on Europe’s traditional powers and reached out to the wider Nordic regions that enjoy high human development indices and are eager to partner with India in its development journey.
Denmark can be counted among India’s closest friends in the EU — quite an improvement from the Kim Davy years. Evidently, India’s move to set aside decades of neglect and focus more attention and resources beyond western Europe is producing dividends.
As part of this outreach, points out GMF fellow Garima Mohan in IPQ, “senior political visits to and summits with the Nordic countries, Central and Eastern European countries, Portugal, and Spain have increased remarkably in the last five years. India has realized that Europe can be an important partner in building India’s domestic resilience and capacities—several new partnership agreements with Europe have focused on increasing trade and investments, green partnerships for tackling climate change, new technologies, and defense manufacturing.”
Worth noting that India is only the second country after the United States with which Nordic nations have entered summitry mechanism. This will be the second edition of the conference which began in 2018 and it comes at a time when Russia has pushed Europe into an existential crisis and forced two Scandinavian nations — Finland and Sweden — to join NATO. In these tumultuous times, the fact that the heads of five Nordic states are meeting and doing summitry with Modi over issues as varied as a green partnership, digital and innovation economy, trade and investment linkages, sustainable development, Arctic region point to the increased salience of India in Europe.
But as they say, it takes two to tango. If there has been an increased realization in India that it needs Europe as its commercial, strategic and developmental partner — one that has a legitimate stake in keeping the Indo-Pacific stable and free of China’s military and mercantile aggression — the EU has also shown a genuine desire to diversify away from China and invest more in its relationship with India.
Two consecutive, pivotal developments have led Europe to question its assumptions that it could keep doing business with China under the rubric of Beijing as a “negotiating partner, an economic competitor, and a systemic rival.” While this framing largely guided EU’s engagement with China, the Covid-19 and Russian invasion of Ukraine have overturned all assumptions.
The pandemic pressed upon Europe the need to diversify its supply chains and hedge against China’s propensity to weaponise trade as a foreign policy tool, and Putin’s war on Ukraine showcased the fragility of the rules-based order. What loomed as a distant threat, came right onto the doorsteps of Europe with the development of a pronounced Sino-Russian axis. Suddenly, the economic opportunities provided by Europe’s ‘systemic rival’ pale in comparison to the threat posed by China, and its relationship with Russia which has ‘no limits’ and ‘no forbidden areas’.
The China-EU summit in April, the first bilateral summit in nearly two years, was described by EU foreign affairs chief Josep Borrell as a “dialogue of the deaf”. He told the European Parliament that “China wanted to set aside our differences on Ukraine, they didn’t want to talk about Ukraine. They didn’t want to talk about human rights and other stuff and instead focus on positive things… This was not exactly a dialogue, maybe a dialogue of the deaf … we could not talk about Ukraine a lot, and we did not agree on anything else.”
The new European attitude towards China is more strategic as the EU slowly transitions from a commercial bloc to a strategic entity. It evidently finds that overdependence on China on trade led by a policy based on corporate lobbying and myopic business deals has been a blunder. China still constitutes 16.1% of the EU’s total trade in goods, far ahead of 1.8% with India, yet the relationship is underlined by growing distrust, made worse by Xi’s steadfast backing of Putin.
This is where the EU finds in India an attractive partner worthy of trust, and from this ideological shift arises the urgency in Europe’s outreach. Worth noting that though the Russian invasion of Ukraine wasn’t the cause of this shift (as several EU member states had released their own Indo-Pacific policies followed by the EU’s adoption of the document in September 2021), it has certainly accelerated the process.
This explains the rather large delegation that accompanied European Commission chief Ursula Von Der Leyen’s recent visit to India and the arrival of foreign ministers of Poland, Lithuania, Slovenia, Portugal, the Netherlands, Norway, and Luxembourg for the Raisina Dialogue. The EU seems inclined to invest its time and resources in genuinely understanding the complexities of India instead of preaching from a pedestal. It puts in perspective Von Der Leyen’s statement in New Delhi that “for the European Union, strengthening and energising its partnership with India is a priority in this upcoming decade.”
India features prominently in the EU’s Indo-Pacific strategy “as an existing or potential partner in all the priority areas” and as one among the few ‘pilot’ countries in the defence and security arena with whom the EU envisages cooperation “on maritime security, counter-terrorism, cyber security, and crisis management” and seeks to “conduct more joint naval activities including exercises, port calls, and multilateral exercises with India to protect the freedom of navigation in the Indo-Pacific,” observes Mohan in another paper.
Now, while documents may layout the broader policies, the China experience has proved to Europe that trade by itself cannot smoothen out the rough edges of geopolitical conflict. Trade can indeed be used as leverage by an adversary to subvert the rules-based system and promote a rival governance model antithetical to Europe’s long-term interests.
As Andreas Fulda observes in RUSI, “whether it is the incarceration of 1.5 million Uyghurs and Kazakhs in mainland Chinese internment and labour camps, the suppression of Hong Kong’s democracy movement, or the cover-up of Covid-19, none of these fundamental disagreements will go away by merely expanding trade and investment with China.”
Despite booming trade (in 2021, EU exports to China reached 223 billion euros, a 77% percent increase over 10 years, and imports climbed to 472 billion euros, an 84% percent jump since 2011), EU ties with China have nosedived.
It makes sense, therefore, for the EU to hedge its bets on India, with whom mutual trade is puny and opportunities galore. India is a less developed and an equally difficult market to penetrate for the EU but it is a fellow democracy, an adherent to the rules-based international order, an Indo-Pacific power and a net security provider in the region.
It is a more strategic outlook that has prompted the European Commission chief to say that “as like-minded partners, the European Union and India will be working on several tracks. We have launched negotiations on a free trade agreement, as well as on investment protection and geographical indications. For Europe, this is a strategic investment in our partnership with India.”
The EU, however, has sought to underpin its multifaceted ties with India on political alignment. From this effort rose the EU-India Trade and Technology Council (TTC), a strategic coordination mechanism that was launched post-Von Der Leyen’s meeting with Modi on 25 April.
The mechanism, which involves the formation of working groups, will “provide the political steer and the necessary structure to operationalise political decisions, coordinate technical work, and report to the political level to ensure implementation and follow-up in areas that are important for the sustainable progress of European and Indian economies” and “will allow both partners to tackle challenges at the nexus of trade, trusted technology and security, and thus deepen cooperation in these fields,” states the joint statement.
Apart from the fact that after the US, India is only the second country with whom the EU has formed a TTC, the mechanism shows that both sides understand where the shoe pinches when it comes to negotiating arrangements such as the FTA. Brussels and New Delhi both feature gargantuan bureaucracies that work in silos and create a huge amount of regulatory cholesterol. The TTC is aimed at cutting through the clutter and ensuring deliverables.
It is easier said than done. Fundamental disagreements on issues that plague the signing of an FTA are unlikely to be quickly solved, and the EU’s propensity to weaponise labour and environmental standards will upend discussions, TTC or not.
And yet, the very fact that such an effort has taken off the ground and EU-India economic integration is being underpinned by a consultative mechanism based on political will, calls for cautious optimism. As Modi travels through Europe, there has never been a more opportune time for EU-India partnership.
Free Trade Agreement: India, EU to resume FTA talks from June 27
After a gap of about nine years, India and the EU will likely resume the much-awaited negotiations for a proposed free trade agreement (FTA) from June 27, as both the sides eye a deal by next fiscal, sources told FE.
Before the negotiations begin, commerce and industry minister Piyush Goyal may visit Brussels later this month — either ahead of the next ministerial of the World Trade Organization starting June 12, or after that — to set the stage for the talks, one of the sources said. “The EU team will visit India after that to formally resume the negotiations,” he added.
Similarly, India’s demand included greater access to the EU market for its skilled professionals, among others. However, both the sides have now decided to take the negotiations to their logical conclusion.
The EU, even after the Brexit, continued to be India’s largest export destination (as a bloc) in FY22, although it has lost some appeal. The country’s outbound shipments to the EU jumped 57% on-year in FY22 to $65 billion, albeit on a contracted base. Similarly, its imports from the EU jumped 29.4% last fiscal to $51.4 billion.
In April, the EU and India decided to set up a trade and technology council to boost bilateral ties, as the bloc’s president Ursula von der Leyen met Prime Minister Narendra Modi here. This move underscored growing co-operation between New Delhi and Brussels, as the US is the only other country that has a technical agreement with the EU, along the lines of the one signed with India now. The council is aimed at providing political-level oversight of the entire spectrum of the India-EU ties and to ensure closer coordination.
India signed an FTA with the UAE in February, New Delhi’s first such pact with any economy in a decade, and sealed another trade deal with Australia in April. Currently, it is also negotiating FTAs with the UK and Canada. The Gulf Cooperation Council, too, has evinced to sign an FTA with India.
The negotiations are a part of India’s broader strategy to forge “fair and balanced” trade agreements with key economies and revamp existing pacts to boost trade. The move gained traction after India pulled out of the China-dominated RCEP talks in November 2019.
The first-ever India-European Union (EU) Security and Defence Consultations was held in Brussels last Friday with both sides focussing on cyber security, terrorism, maritime awareness, training modules, joint exercises, threat assessments among other issues, ET has learnt.
Europe’s pivot to India: Examining India’s NATO calculus amid China’s fall from grace
India’s so-called “strategic ambivalence” on the war in Ukraine – which is hardly ambivalent and more driven by national interest – is being severely criticized in certain European quarters. A bulk of the criticism is directed at India’s oil trade with Russia: New Delhi has been buying discounted Russian crude oil amid a weakening rupee against the dollar (exports to India increased steeply from about 1 percent to 18 percent during February-May), in order to curb domestic inflation and stave off the negative impact of the sanctions on its Russian tie-ups.
However, the broad contention is that this is just a temporary solution to India’s long-term requirements; more so given the planned European ban on insuring ships carrying Russian oil, which is due to come into effect in December 2022. Besides the short-term economic benefits, Indian energy companies also have stakes in Russian projects that will be impacted by the sanctions regime – hence, the added pressure on India to increase the energy imports. In response to Europe’s criticism, India has called out Western sanctions on Venezuela and Iran for squeezing “every other source of oil”, in addition to the usual railings against Europe’s inability to appreciate the rest of the world’s compulsions.
In contrast, the European Union (EU) has not only identified Ukraine’s security with that of Europe’s, but is also making considerable efforts to reduce its dependency on Russian energy – a “three-pronged plan” of importing more non-Russian gas, shifting into renewable energy, and saving more energy at a cost of about US$316 billion.
For the West, therefore, India is not only at a moral disadvantage but also a less trusted partner for its lack of commitment and political will to stand up to non-democratic means of violence or aggression, especially when they involve utter ruination. This apparent disunity among the democratic world is a bigger concern to some than the ongoing democracies versus autocracies conflict – what some have labeled “the new Cold War”. Such speculations of rift had even foretold an end to the Quadrilateral Security Dialogue (also known as the Quad, comprising Australia, India, Japan, and the US) due to differences with India, but recent summits have reiterated that the partners are united over the core agenda driving the grouping – the Indo-Pacific security architecture where the focus is on China.
Similarly, India-EU cooperation has not as yet been impacted by such dissonance. Although the Western voices that are clamoring for India’s punishment amid its neutral stance seem to be dominating the media, the on-ground reality does not indicate any trend toward even isolation. On the contrary, India is being “courted” by both the East and the West, which is largely a consequence of the events unleashed by the Ukraine war and India’s deft handling of its pointed, multi-alignment foreign policy geared to greater strategic autonomy goals. India’s participation in the Group of Seven (G7) as a partner state, as well as its involvement in BRICS (Brazil, Russia, India, China, and South Africa) and the Russia-India-China meetings, exemplifies India’s unique status today in a divided world.
This is also in line with India’s multipolar world vision, forwarded by Prime Minister Narendra Modi in 2018, of “equitable, pluralistic, and representative” governance. How far this strategy works will also influence the India-China power parity, including India’s much-cherished dream of being a permanent member of the United Nations Security Council. Modi’s repeated presence at the G7 despite differences over Ukraine highlights India’s growing importance in world affairs, and it is not incumbent on just being a counterweight to China.
Further, against a scenario where its Himalayan borders are still in a state of perpetual tensions, Europe’s official recognition of China as a “systemic rival and challenge”, respectively by the EU and the North Atlantic Treaty Organization (NATO), is good news for India. It means that until the Russian antics escalate to a point where India’s present strategy backfires, the focus on China will continue to strengthen India’s position.
But what is the current trajectory of India-EU ties? Would India be receptive to NATO’s outreach in the Indo-Pacific? What are India’s objections to the “Asian NATO” proposition? And will the “China threat” bring NATO and India closer?
India’s post-Ukraine cooperation fillip with the EU
Since the Ukraine War started, India has welcomed a flurry of high-level international visitors, including from Europe (Austria, Lithuania, Luxembourg, Netherlands, Norway, Poland, Portugal, and Slovenia, among others). The primary aim of these visits initially was to convince India to reconsider its stand, but they have given momentum to the already strengthening cooperation, as evidenced by the outcomes from outgoing UK Prime Minister Boris Johnson’s and European Commission President Ursula von der Leyen’s (first visit as EU chief) calls.
With bilateral trade achieving a credible annual growth of about 43 percent in 2021-22 (the EU is also India’s second-largest trading partner, after the US, and destination for Indian exports), Modi and von der Leyen agreed to form an EU-India Trade and Technology Council – the first such deal for India and only second for the EU – to deepen cooperation in trade, technology, and security. Her visit also helped resume the “broad-based, balanced, and comprehensive” Free Trade Agreement (FTA) negotiations, with the first round concluding in July and the second slated for September. The FTA will propel India to expand and diversify its exports, as well as maximize the competitive advantage.
Soon after, Prime Minister Modi’s hectic visit to Europe in May (three countries in three days) in what was his first international trip in 2022, highlighted the importance of Europe in India’s policy today and also helped calm the frayed nerves vis-à-vis its neutral stand. Energy security, secure supply chains, and sustainability (including green energy) are the three top areas of interest for both India and the EU; Modi’s visit emphasized on the three, in addition to showcasing business and investment opportunities in India.
Modi’s participation in the second Nordic Summit was of particular significance amid Finland and Sweden’s NATO accession, which is unlikely to affect India’s burgeoning relations with the Nordic states or the Russian stand. Their joint summit, unlike the stand-alone G7 plus partner countries’ Resilient Democracies Statement, did not ignore the Ukraine crisis but pointed to the “destabilizing” effects. Besides Ukraine, the summit covered a wide range of issues including post-pandemic economic recovery, climate change, innovation and technology, renewable energy, the evolving global security scenario and cooperation in the Arctic – an important avenue given increased Russian-Chinese stakes and the ensuing questions post-sanctions.
Prior to the NATO summit in Madrid, which has exacerbated Europe’s relations with both Russia and China, Modi’s second visit to Europe (for the G7) in a span of days, while steering clear of these tensions, reiterated India’s centrality in transatlantic geopolitics beyond tokenism. His one-on-one meetings with several world leaders are reminiscent of his phone calls soon after the war had begun, underscoring India’s acute and mature diplomatic judgment. The G7+5 joint statement reaffirmed that the West values India’s democratic credentials and its indelible part in maintaining rules-based international order in defiance of China. The G7 statements have been rejected by China, comparing them unfavorably to the “inclusive” BRICS statement and as a means to sow discord among BRICS nations (mainly referring to India).
Accepting their respective positions on Ukraine and choosing to move forward with cooperation in areas of mutual interest have made these achievements possible – many of which are notable firsts. Europe and India’s mutual outreach has promoted dialogue, which has in turn paved the way for the partners to prioritize their relationship and overcome their differences on this polarizing and decade-defining issue of Ukraine. Moreover, the perseverance is a testament to the importance of their strategic partnership for both Europe and India. New Delhi believes Europe will be a strong player in a truly multipolar world and wants it as a key partner. For the EU, India provides an ideal “entry point” for its ambitions in the Indo-Pacific to execute and strengthen its position further in the region.
Moreover, the breakdown of relations between the EU and China has allowed Europe to step up its engagement with India as their security outlooks have grown more similar. While Europe has chosen to be vocal on Russia’s infringements of the international order, in the past it has trodden more carefully with regard to China. Now, however, tensions have come to the surface. Europe has been emboldened by China’s “friendship” with Russia and their concerted and repeated attacks on NATO, blaming the eastward expansion for Europe’s troubles to adopt a more confrontational approach to China.
This has fundamentally shifted the European foreign policy to a direction that is more closely aligned with that of India’s, which is set to be an “accidental beneficiary.” Moreover, despite India’s long-term ties to Russia, strategic calculations in Brussels will likely view these ties as much less of a threat than China’s close relations with Russia. This is due not only to India’s democratic credentials but also to China’s unstoppable rise and growing clout in Central and Eastern Europe and the Arctic – the latter Asian giant has obviously fallen out of favor. Europe also sees an opportunity to increase trading opportunities as Delhi reduces its overdependence on Moscow for defense equipment. Notwithstanding current claims of bonhomie and strong foundation, continuous fortification of commercial and security partnerships that will not waver under the pressure of their underlying differences is necessary.
NATO expansion: Does it matter to India?
At the outset, India-EU ties look positioned to benefit from NATO expansion because of their newly proclaimed common position on China. The recently released NATO Strategic Concept in June 2022 identifies China as a “systemic threat” to North Atlantic security and aims for closer cooperation and possible expansion into Asia to confront the situation. NATO’s re-focus is bringing attention to China, which is set to benefit India as a gateway to the Indo-Pacific for Europe. However, India’s officially recalcitrant stance toward NATO and the general concept of “bloc politics” could be a setback for cooperation, even as certain strategic circles in India are questioning the lack of impetus for a “collective engagement” with NATO given India’s recent proclivity toward security/military exchanges via bilaterals and minilaterals (e.g. Quad). India was noticeably absent as a NATO Asia-Pacific partner at the summit in Madrid, while Australia, New Zealand, Japan, and South Korea were all present to forge stronger security ties. India’s exclusion was not a repercussive move over Delhi’s stance on Ukraine, but rather a choice by New Delhi to stay clear of any involvement: A formal expansion of NATO into Asia or even a NATO-like collective security-oriented alliance remains unacceptable to New Delhi and the enduring principle of non-alignment. Besides, the emergence of an “Asian NATO” is unlikely for the following reasons:
Asia is a “non-monolithic entity” – political, social and cultural diversity, along with the widely differing interests of states and limited consensus on threat perception makes the notion of a collective security organization difficult.
As much as China is a primary threat for many regional powers, most do not see it as a permanent enemy in the way Russia is for Europe.
China is deeply integrated with the region; Beijing’s immense economic and political clout, as well as outreach, will prevent states from entering into a contractual obligation inherent in a NATO-like alliance.
India’s multipolar vision dissuades the formation of a military alliance – though it is not an inconceivable action in the future.
Notably, New Delhi would reckon the possibility of a military alliance under extreme conditions; the two probable but distant scenarios are China’s attack on India, leading to a full-scale China-India war, or Beijing’s invasion of Taiwan, leading to a range of complex regional security conditions that would affect India’s security primarily on the maritime domain. Under other circumstances, India will continue its ‘power-parity’ calculus vis-à-vis China along with its multifaceted, assertive foreign policy.
Nevertheless, there are doubts as to how realistic it will be for India to continue to maintain this position of strategic autonomy, given that it needs to take effective moves to counter-balance China. Arguably, India is already involved in geopolitical bloc politics, despite its aversion, via its membership to the Quad. Though India’s Minister of Foreign Affairs, S. Jaishankar, continues to argue that the Quad is not “directed against any country” and does not act as an “Asian NATO”, it is undeniably a minilateral that has emerged as a response to China’s assertive behavior; and the primary agenda is to counter Beijing. China certainly believes so, with top foreign ministry officials drawing parallels between NATO’s eastward expansion and bloc politics emerging in the Indo-Pacific. India, however, interprets this as merely evidence of China’s paranoia about the emergence of a Western alliance in the Indo-Pacific, and asserts that the circumstances in Europe and Asia are not similar.
Yet, it is the common threat of a hegemonic China that has brought the US and Europe closer to India, pushing it to effectively discard its non-alignment principles and even conjure a future where “customized” cooperation with the NATO framework is not a pipe-dream. New Delhi will continue to strengthen its ties with the European world, while an effective engagement with NATO remains a lesser subject for now.