EU seeks to boost ties with India as relations with China cool
- Talks on a comprehensive trade agreement have resumed after eight years as the relationship between Brussels and Beijing is becoming increasingly rocky
- The EU’s trade commissioner says the bloc views the relationship with India as ‘one of the most important for the upcoming decade’
The talks, which aim to strengthen economic ties and establish a joint comprehensive trade agreement by the end of 2023, are the latest in a series of efforts by Brussels to upgrade ties with India.
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Last week EU trade commissioner Valdis Dombrovskis said that “for the European Union, the partnership with India is one of the most important relationships for the upcoming decade”, while Indian Commerce Minister Piyush Goyal said the talks represented “a partnership for world trade in the 21st century”.
EU-India trade talks have always proved difficult – they stalled in 2013 over differences on Indian tariffs and EU visa policies for Indian skilled workers – but Garima Mohan, a senior fellow at the German Marshall Fund’s Asia programme, said the relationship was now “very mature”.
“In the past, one single incident used to take the whole partnership hostage. For example when the Italian marines case happened in 2012 … EU-India summits were suspended for a period of four years,” she said, referring to an incident off the coast of Kerala where two Indian fishermen were shot dead by Italian marines on board an oil tanker.
“But now there is a sign of maturity and growth in the relationship, and both sides are very eager to make sure that any differences do not overshadow the convergences they have to work together.”
She also said the EU was prioritising its ties with New Delhi despite the latter’s failure to condemn Russia’s invasion of Ukraine.
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“There has been considerable pressure on New Delhi from the EU, to explain its position and its stance,” Mohan said.
“Delhi has been able to communicate and convince the Europeans that it is actually in a difficult geopolitical neighbourhood. But behind closed doors, the Indian prime minister has made calls to President Putin and President Zelensky and constantly communicated with the Europeans as to what India’s position is.
“This also explains why India has not taken that big of a hit compared to China, which has been quite obstinate and open in its differences with Europe.”
“None of the other big beasts really pushed back. When India asked for something, the US said nothing. When India stripped all of the substantive content out of the fisheries text, the EU grumbled but … ultimately did nothing,” Sam Lowe, a trade analyst, wrote in his Most Favoured Nation newsletter.
“From a geostrategic point of view, the US, EU and allies need India to be onside. Or to put it another way, the West can’t afford to open up another front with India, given its current problems with both China and Russia.”
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The two leaders had previously met in New Delhi in April, where von der Leyen shocked even her own trade department by announcing a joint trade and technology council with India without briefing Brussels technocrats in advance.
An EU-China summit in April yielded no deliverables by comparison, with EU leaders focused on criticising Beijing over its stance on Russia and human rights, as well as its trade practices.
However, in recent weeks, leaders from EU member states have made more conciliatory remarks towards China, which remains the bloc’s largest trade partner while India is only tenth on the list.
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Vivek Mishra, a fellow at the Observer Research Foundation in New Delhi, suggested that while there was no clear winner between India and China, Delhi was currently in pole position.
“While the comparative advantage to India can largely be attributed to a hostile China-West relationship and China’s revisionist foreign policies, India’s own potential as a market and a stable democratic anchor have added to it,” he said.
“India brings to the table an option to balance China and manage its belligerence in the Indo-Pacific, while China is a target.”
Mishra also pointed to European business efforts to diversify their supply chains after the pandemic.
Roland Busch, chairman of the Asia-Pacific Committee of German Business, welcomed the resumption of trade talks with India, saying: “At a difficult time when companies want to diversify their markets, production and supply chains, the German economy is also looking particularly at the potential of India.”
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Germany is the largest EU trading partner for both China and India, but Beijing’s zero-Covid strategy has damaged it in German eyes.
Mohan said: “German industry knows that it needs to diversify not just out of China, but also look at alternative markets. It’s not about leaving one country and backing up and going to the other. German companies are very much still invested in China, but there is interest to diversify investment and India’s potential is being reviewed.”
