The EU and the Emerging Countries - EU and India
Rapporteur Mario Pirillo (2012)
Abstract

 

The partnership between India and the European Union has grown particularly solid and fruitful over the last decade. Proof of this lays in the positive evolution of bilateral economic and commercial relations; the development and structuring of bilateral consultation mechanisms; the strengthening of political dialogue, particularly with regards to global security and climate change; and increased efforts in the cultural and scientific exchange process. Nevertheless, some negative aspects emerge. Foreign direct investments (FDI) and trade are significant, but they remain unbalanced, with a significant but unmet potential for growth. Indian administrative decentralization regarding FDI often leads to confusing situations, which are a major obstacle to investment. Another sore point in relations between Brussels and New Delhi concerns trade barriers, since India remains reluctant to open up its economy to foreign investors. Many sectors of the economy are still closed to foreign investment (agriculture, retail commerce, and construction), or require government authorizations that are not automatic. This deadlock could be broken by the conclusion of the negotiations for a Free Trade Agreement aiming to promote collaboration in commerce, energy, and research.


Brussels requests greater economic liberalism, but public opinion in India largely remains favourable to the protection of certain sectors of the national economy. The clash between these two different visions is the main barrier that needs to be overcome.
For the economies of EU member countries, India offers both challenges and opportunities The former come from India’s increasing ability to manufacture a wide array of products at low cost. The latter relate to major market openings for European products, including high-quality consumer goods for the growing Indian middle and upper classes in the largest cities, which are currently estimated at about 100 million people and projected to increase to 300 million over the next decade, with average incomes also expected to grow. Foreign direct investment from the rest of the world to India is expected to double, with the largest increases in telecommunications, energy, urban services, transportation, and electrical appliances. However, investment outflows from India are also expected to increase significantly, especially on the part of Indian groups already active in many important sectors, such as pharmaceuticals, telecommunications, software, and steel.
India is gradually regaining a solid position in the international economy and is becoming a major player in Asian and global diplomatic scenarios.
 

The EDP’s political objectives regarding relations with the EU and India have been identified in light of the above considerations, and are detailed below.

  • Negotiations on the EU-India Free Trade Agreement: Introduction of non-economic clauses in the agreement, such as legally-binding clauses on human rights and sustainable development, in order to ensure, through the Free Trade Agreement (FTA), the consolidation of the political dimension of commercial relations with India.
  • Negotiations on the EU-India Free Trade Agreement and EU-India Relations: Vigilance over the correct consideration for the position and role of the European Parliament during negotiations, in order to ensure respect for the democratic method even during preparatory phases to the Agreement.
  • EU-India relations: Sharing of the European regional integration experience as a potential model that may inspire – albeit with all due differences – Indian regional policy in South Asia.
  • EU-India relations: Constant monitoring of the potential impact of EU-India trade relations on the level of consumer security guaranteed within the EU, for the double purpose of ensuring that said level is not in any way diminished within the European market, but instead raised within the Indian market as well.
  • EU-India relations: Encouraging the European Union to speak “with a single voice” even in sectors traditionally reserved for national foreign ministries, in order to promote the EU on the international scene and ensure that its individual member states may benefit from the EU’s stature as an international actor.