Strengthening India-EU Ties: Trade, Technology, and Strategic Cooperation

Syllabus:

GS-2:

Important International Institutions , Government Policies & Interventions , International Treaties & Agreements , Effect of Policies & Politics of Countries on India’s Interests

Focus:

A high-level EU delegation, led by European Commission President Ursula von der Leyen, visited India to deepen the India-EU Strategic Partnership. Key discussions focused on trade, technology, green energy, defense, and people-to-people ties, marking a new phase in bilateral cooperation.

Strengthening India-EU Ties: Trade, Technology, and Strategic Cooperation

Strengthening Diplomatic and Strategic Engagement:

High-Level Delegation Visit

  • A 22-member delegation from the European Commission’s College of Commissioners, led by President Ursula von der Leyen, visited India.
  • The visit marks a new phase in India-EU bilateral relations, coinciding with challenges in Europe-US ties.
  • This was the first official trip outside Europe by the current College of Commissioners since they took office in December.
  • It was also the first-ever joint visit to India by the Commissioners.

India-EU Diplomatic History

  • India established relations with the European Economic Community in 1962.
  • Key milestones in diplomatic relations:
    • 1993: Joint Political Statement signed.
    • 1994: India-EU Cooperation Agreement was established.
    • 2000: First India-EU Summit (Lisbon).
    • 2004: Relationship upgraded to a Strategic Partnership (5th Summit, The Hague).
  • Prime Minister Narendra Modi and President von der Leyen have met at least seven times since 2020.
  • The India-EU Strategic Partnership: A Roadmap to 2025 was adopted in 2020, outlining future collaboration.

Understanding India-EU Relations:

Historical Relationship:

  • Diplomatic ties since 1962 with the European Economic Community (EEC).
  • Strategic Partnership established in 2004 to deepen cooperation.
  • India-EU Joint Political Statement (1993) and Cooperation Agreement (1994) laid the foundation for engagement.
  • 15 India-EU Summits held, first in Lisbon (2000), latest in 2021.

Present Status of India-EU Relations:

  • EU is India’s largest trading partner in goods, with bilateral trade reaching $135 billion in FY 2023-24.
  • EU FDI in India: $117.4 billion (16.6% of total FDI) since 2000.
  • Strategic cooperation in trade, technology, climate action, and security has strengthened through platforms like the India-EU Trade and Technology Council (TTC).

Key India-EU Initiatives:

  • Strategic Cooperation & Global Governance:
  • EU-India Strategic Partnership: A Roadmap to 2025
  • Strengthens collaboration in trade, investment, digitalization, climate action, security, and governance.
  • Focuses on clean energy, connectivity, and security, fostering sustainable growth and technological advancement.
  • Energy & Climate Action:
  • EU-India Clean Energy and Climate Partnership
  • Promotes renewable energy, smart grids, and clean technology financing.
  • Supports climate adaptation and mitigation, positioning India as a global leader in green transition.
  • EU-India Green Hydrogen Partnership
  • Develops policy frameworks and pilot projects for green hydrogen and offshore wind energy.
  • Provides €1 billion funding from the European Investment Bank (EIB) for India’s clean energy goals.
  • Sustainable Consumption & Production (SWITCH-Asia Programme)
  • Encourages eco-friendly manufacturing, waste management, and sustainable consumer practices.
  • Promotes circular economy initiatives, reducing environmental impact.
  • Trade & Economic Cooperation:
  • EU-India Trade and Technology Council (TTC)
  • Focuses on digital governance, trade resilience, and green technology partnerships.
  • Strengthens supply chain diversification, reducing dependence on single markets.
  • Global Green Bonds Initiative
  • Supports green bond issuance to finance sustainable infrastructure and climate projects.
  • Enhances climate finance frameworks, attracting private investment in clean energy.
  • Sustainable Urbanization & Connectivity:
  • EU-India Connectivity Partnership
  • Strengthens digital and physical infrastructure, improving supply chains and logistics.
  • Enhances urban mobility and cross-regional economic integration.
  • India-EU Urban Forum
  • Facilitates dialogue between officials, experts, and stakeholders for sustainable urban development.
  • Encourages best practices and innovative policies in city planning.
  • Social Development & Gender Equality:
  • WeEmpower India Initiative
  • Strengthens gender equality and women’s participation in clean energy and sustainable industries.
  • Supports female entrepreneurship and inclusive business models, boosting economic diversity.

Key Bilateral Meetings and Policy Initiatives:

Trade and Technology Council (TTC)

  • Established in 2022 to coordinate on trade, trusted technology, and security challenges.
  • It has three major pillars:
    • Digital & Strategic Technologies
    • Clean & Green Technologies
    • Trade, Investments & Resilient Supply Chains
  • The first ministerial meeting was held in May 2023, and the second meeting took place in February 2025 in New Delhi.

Free Trade Agreement (FTA) and Investments

  • India and the EU have been negotiating an FTA for over 15 years.
  • The EU is India’s largest trading partner in goods, with bilateral trade increasing 90% over the last decade.
  • Trade statistics (FY 2023-24):
    • Goods trade: $135 billion (Indian exports: $76 billion; Imports: $59 billion).
    • Services trade: $53 billion (Indian exports: $30 billion; Imports: $23 billion).
    • EU Foreign Direct Investment (FDI): $117.4 billion (April 2000 – September 2024), constituting 6% of total FDI in India.
    • Indian FDI outflows to the EU: $40.04 billion (April 2000 – March 2024).

Geopolitical Cooperation and Security

  • India and the EU discussed global security challenges, including the Ukraine conflict.
  • The US shift in stance under President Donald Trump has left European nations reassessing their security partnerships.

Technology and Scientific Collaboration:

Science and Technology Cooperation

  • The India-EU Science and Technology Cooperation Agreement (2007) serves as the foundation for R&D collaboration.
  • Key agreements:
    • 2022: Agreement on High-Performance Computing cooperation.
    • 2023: MoU on semiconductor R&D cooperation.
    • 2024: The EU participated in India’s Global AI Summit.

Green Energy and Climate Initiatives

  • India-EU Green Hydrogen Cooperation Initiative launched to support clean energy solutions.
  • India was the exclusive partner country at the European Hydrogen Week (Brussels, 2024).
  • The European Investment Bank (EIB) has pledged €1 billion to fund India’s hydrogen projects.
  • India and the EU aim to develop a green hydrogen ecosystem by 2030.

People-to-People Ties and Education Cooperation:

Growing Indian Diaspora in the EU

  • The EU hosts a large Indian diaspora, including students, researchers, and skilled professionals.
  • Indian professionals received over 20% of EU Blue Cards issued in 2023-24.

Academic and Research Collaboration

  • India is a major recipient of Erasmus scholarships, with over 6,000 Indian students benefiting in the last two decades.
  • More than 2,700 Indian researchers have received funding from Marie Skłodowska-Curie Actions (Horizon Europe) since 2014, making India the top global beneficiary.

Defence and Space Cooperation:

Maritime Security and Defence Ties

  • India and the EU are strengthening maritime security and Indo-Pacific cooperation under the ESIWA+ security program.
  • The first joint naval exercises took place in the Gulf of Guinea (October 2023).
  • Focus areas:
    • Counter-piracy operations
    • Global security coordination
    • Response to natural disasters
    • Counter-terrorism

Space Collaboration

  • ISRO and the European Space Agency (ESA) have enhanced space cooperation:
    • December 2024: ISRO’s PSLV launched the EU’s PROBA-3 mission.
    • Joint participation in Chandrayaan-3 and Aditya-L1 missions.
    • MoU signed for India’s Gaganyaan human spaceflight program.

Challenges in India-EU Partnership:

  • Stalled Free Trade Agreement (FTA) Negotiations
    • Ongoing India-EU FTA negotiations have faced delays for over 15 years due to disagreements on tariffs, market access, and labor standards.
  • Regulatory and Bureaucratic Barriers
    • Complex regulations in both India and the EU hinder smoother trade and investment flows.
    • Data protection laws in the EU (GDPR) create challenges for India’s IT sector.
  • Geopolitical Divergences
    • Differences in approach to Russia-Ukraine conflict, with India maintaining a neutral stance while the EU imposes sanctions.
    • Varying positions on China’s Belt and Road Initiative and Indo-Pacific security.
  • Climate Commitments and Carbon Border Adjustment Mechanism (CBAM)
    • The EU’s CBAM (carbon tax) could impact Indian exports, particularly in steel and aluminum sectors.
  • Technology and Digital Cooperation Challenges
    • Limited R&D collaboration due to regulatory constraints and intellectual property rights (IPR) concerns.

Way Forward for Strengthening India-EU Relations:

  • Fast-Track FTA Negotiations
    • Address key trade barriers and finalize the agreement to enhance bilateral trade.
  • Strategic Security Cooperation
    • Strengthen maritime security, counter-terrorism, and defence collaboration, particularly in the Indo-Pacific.
  • Green Energy and Sustainable Growth
    • Expand partnerships in green hydrogen, renewables, and climate finance.
  • Enhanced Digital and Tech Collaboration
    • Boost cooperation in semiconductors, AI, and cybersecurity through joint R&D initiatives.
  • People-to-People Engagement
    • Increase student exchanges, scholarships, and work mobility agreements for skilled professionals.

Conclusion:

The India-EU partnership is at a crucial turning point, with growing collaboration in trade, technology, security, and climate action. Addressing geopolitical challenges, regulatory hurdles, and trade barriers will be key to unlocking the full potential of this relationship and ensuring long-term mutual growth and stability.

Mains Practice Question:

Discuss the significance of the India-EU Strategic Partnership in the context of global geopolitics. What are the key challenges hindering deeper engagement, and what steps can be taken to strengthen bilateral cooperation? (250 words)