The EU-India Summit: Gearing up for global challenges

The recent EU-India summit has highlighted that the relationship has developed into a mature strategic partnership, writes Gauri Khandekar.

Gauri Khandekar is a researcher at the Brussels School of Governance at the Vrije Universiteit Brussel.

On 8 May the EU-India summit took place in an unprecedented format – Indian Prime Minister Narendra Modi joined (virtually) the EU Council meeting composed of the heads of state and government of the EU’s 27 member states and the Presidents of the European Council and Commission, an arrangement previously used only for the United States.

The set-up itself signposts the importance Brussels now attaches to New Delhi, especially amidst growing frictions in EU-China relations and rising European ambitions to shape the regional architecture of the Indo-Pacific.

The summit launched a swathe of new – and old – initiatives. First, negotiations on the bilateral free trade and investment agreement launched in 2007 were resumed after a lull of a full eight years.

In recent years, the EU lost its position as India’s top trading partner to China and the US (the EU accounted for €62.8 billion goods trade with India in 2020 or 11.1% of India’s total trade as compared to China and the US at 12% and 11.7% respectively).

It is believed that the free trade agreement (FTA) would help the EU regain lost ground. The FTA will still face challenges on semantics (the EU prefers a broad all-encompassing deal while India prefers a living document which can be ameliorated with time) and on specific issues (agriculture, dairy, automobiles, wines and spirits and so on).

But is high on symbolism given Europe recently suspended the China-EU Comprehensive Agreement on Investment (CAI) following Chinese counter sanctions on the EU, and US President Biden’s push to build a China-free tech supply chain. There are also growing fears in Europe of a Chinese buying spree of stressed European assets especially amidst pandemic-induced economic vulnerabilities.

Second, negotiations on a separate agreement on geographical indications, dedicated dialogues on WTO issues, regulatory cooperation, market access issues, as well as a new working group on supply chain resilience were initiated.

These dedicated dialogues and other instruments are in essence very significant for a few reasons. For one, the pandemic laid bare severe weaknesses in basic and essential materials supply chains. Within the context of the European Green Deal, the EU intends to soon install a Carbon Border Adjustment Mechanism (CBAMs) or, put simplistically, a carbon price on high-carbon materials entering the EU.

The proposed CBAM has raised eyebrows in India and beyond. While the EU claims the measure will be WTO-compliant, others including India see it as a protectionist policy. More poignant perhaps is the fact that the EU and India stood on opposing ends of the issue of vaccine patent waivers.

In October 2020, India along with South Africa solicited the WTO to temporarily suspend intellectual property rules related to COVID-19 vaccines which would allow drug makers in these countries to mass-produce the vaccines quickly and affordably. The move was then fiercely opposed by the EU. While Brussels may now be considering it following US backing to patent waivers, it raised important questions regarding the EU as a strategic partner. These instruments would help iron out important concerns.

Third, and arguably the most strategic foreign policy collaborative initiative of the EU-India partnership to date, both sides unveiled a “comprehensive and ambitious Connectivity Partnership” covering digital, energy, transport and people-to-people connectivity, all encompassed in a transparent, sustainable, and rules-based framework.

The Connectivity Partnership is to be an Indo-European rival to the Chinese Belt and Road initiative – oft-critiqued as a debt trap – and will allow both sides to pursue strategic projects in third countries in Africa, Central Asia and the broader Indo-Pacific region. Both sides also held their first maritime security dialogue in January this year.

Although the connectivity partnership represents a significant departure for Indian foreign policy which has long eschewed such joint bilateral cooperation in third countries, it is indicative of the growing convergences in EU-India foreign policy especially vis-à-vis China. It will be important that the Connectivity Partnership not remain limited to optics and can actually harness shared geopolitical priorities. It should also be imperative that the Connectivity Partnership be Paris Agreement-compliant.

EU-India observers lament that the last few years of the bilateral relationship have been slack. This is erroneous. The EU-India Clean Energy and Climate Partnership and the Partnership on Smart and Sustainable Urbanisation were both launched in 2016 and cover cooperation on smart grids, cost-effective offshore wind energy and net-zero energy buildings, energy storage, advanced biofuels, and so on.

These are key pillars of the strategic partnership which deliver high on functionality. Going forward, an EU-India Partnership on Innovation would also be beneficial and harness the potential of the above-mentioned platforms. Additionally, the EU is also a partner in India-led initiatives like the International Solar Alliance and the Coalition for Disaster Resilience Infrastructure. Lead by Sweden and India, LeadIT provides an area for public-private cooperation on industrial transition.

As both partners pursue their respective climate transitions, collaboration on climate action could be enhanced much more. Two such areas for consideration are industrial decarbonization and just transition. The energy intensives industrial sector is often called a “hard-to-abate” sector given its high CO2-and-energy intensive processes and low current availability of commercially available technological decarbonization solutions.

The EU and India could set up a sizeable mission-oriented finance and R&D programme to accelerate the decarbonization of the sector through targeted brownfield conversion, development and deployment of breakthrough low-carbon technologies and promotion of electrification of industrial processes. Such a programme may also eventually help India comply with the EU’s proposed CBAM.

India has an impressive track record on renewable energy and is well on track to achieve its 175GW by 2022 renewable energy target, with plans to install 450GW renewable capacity by 2030. Coal still provides around 70% of India’s electricity and employs roughly half a million people. This decade will therefore be crucial for India as it paces through its energy transition.

A just transition would be paramount for India. The EU has recently established on its own just transition mechanism. Supporting the same in India through sharing of best practices, capacity building measures, investment or financial means would allow the country to take on an inclusive and sustainable development trajectory.

The EU-India relationship has developed into a mature strategic partnership. The pandemic has demonstrated the same as both partners came to the aid of each other in time of extreme need. Foreign policy collaboration is developing satisfactorily amidst growing convergences of priorities, threat perceptions and interests.

However, going forward, the global climate and energy transition will require both India and the EU to collaborate more than ever and enhanced cooperation on climate action and diplomacy must become top priority for the bilateral relationship. Collaboration on industrial decarbonization and just transition are two areas for immediate exploration.

Source: EURACTIV