India and the European Union: evolution of perceptions and mutual interests

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This article is taken from the thesis written by Cyril Berthod under the supervision of Robert Frank and Max Jean Zins:« L’Inde et l’Union européenne : Évolution et problématiques croisées d’une relation à plusieurs niveaux » (India and the European Union: Evolution and interlinking issues of a multi-level relationship), defended in April 2009 at Panthéon-Sorbonne Paris 1 University.

 

A gradual rapprochement

On a historical level, relations between Europe and the Indian sub-continent are based on two successive periods: the colonial period that finished with the declaration of independence of the Indian union on 15 August 1947, and the period of post-independence. The European entity, as an association of several states, was born following the Second World War and has thus only known the independent Indian state.

Relations between the European Union and the Indian sub continent have a long history that reaches back to the establishment of the first official contacts at the beginning of the 1960s. India was one of the first developing countries to establish diplomatic relations with the European Economic Community (EEC). India had to redefine its relations with the rest of the world after its independence. Its greatest challenges were to find new partners necessary for the country’s growth. Two perspectives were dominant at the time. The first was a political and strategic repositioning in the world whereas the second was an economic and commercial vision of development. The latter was based on a few crucial principles: a willingness to maintain friendly relations with all countries, the pacific resolution of conflicts, the equality of state sovereignties, the independence of thought and action guaranteed by the status of non-aligned countries, and equity in the conduct of international affairs.

 

15 August 1947, India becomes officially independant
Indian women

 

The Indian reaction to different phases of the European construction was mixed. In 1957 India protested strongly against the project of the common European Market, seeing it as ‘conventions between European countries with the sole aim of agreeing on preferential tarifs.’[1] Furthermore, the state did not understand the European construction and its willingness to integrate ‘from below’, or through the actions of sovereign states whereas India was constructed ‘from above’, or through the willingness of a central government to unify the different provinces and ethnic groups. In 1962 Jawaharlal Nehru, the Indian Prime Minister took the initiative to establish a diplomatic mission in Brussels, a gesture that signified the openness to new, post-colonial multilateral and egalitarian relations between the two entities. This decision reflected two aims of the government in New Delhi: ensure better access for its products to the Community market and to contribute to the CEEs recognition of the importance of setting up an encompassing development strategy.

The Indian government quickly tried to use the institutional tools it its disposal. The first cooperation agreement between the EEC and India was signed in 1973. It envisaged the development and diversification of commercial exchanges. A mixed commission, charged with identifying sectors of privileged cooperation were put into place in Brussels in the framework of this agreement [2]. The agreement of 1973 was replaced by another more complete agreement in 1981 that no longer referred solely to commerce, but to a broader economic cooperation [3]. Yet it was only from the moment that these economic structural reforms were launched in India, by the Congress party, that the relations between India and the EU truly accelerated. This step, that signalled the transition from post-colonial India – relegated to a relatively defensive position characterised by economic protectionism - to an ‘open India’, attests to a profound transformation. Following the fall of non-aligned India’s old ally, the Soviet Union in 1991, the Indian economic system was overhauled and authorities in New Delhi made a call for a redefinition of the world order.

New strategic orientations

From this point in time, India turned towards the European Community and the agreement signed in December 1992 [4] was one of the cornerstones of this reinforced partnerships. If this text reflected the EECs growing interest in Asia, for India it was the opportunity to make itself known as an increasingly important actor on the world scene. Actors on the Indian economic scene however denounced significant inequalities, particularly in relation to the large trade deficit between the two partners. India imported high value added products sold at low prices on the European market (both agricultural and textile products) – a situation that continued to worsen. According to D.K Giri, Indian exports in 2000 represented more than 1.3% of the total of EU imports, whereas European products represented almost one quarter of the value of Indian imports.

Indian leaders also denounced what they considered to be misguided policies on the part of the European Union, particularly active in the politics of attributing development aid. The EU provided 1.5 billion Euros to India between 1970 and 1990, becoming the country’s largest donator. Tagged primarily for the fields of health, education and water, by obstructing the production of certain products it had to buy in Europe, this money risked plunging India into a process of economic dependence. India also accused developed countries of establishing the respect of human rights as a prerequisite for all economic aid, thus using it as an economic weapon or pointing to it as a right of intervention.

Foreign investments in India followed the same logic. The formal structures established in 1991 by Manmohan Singh, then Minister for Finance, contributed to liberalising exchanges by putting an end to trade constraints. Yet at this time, India was disinclined to accept the establishment of foreign companies on its territory, companies that were still considered to be symbols of Western imperialism. What is more, the Indian government did not wish to face an electorate of hundreds of millions of impoverished people directly touched by the first perverse effects of globalisation. India’s position then, characterised by defiance towards foreign ambitions, remained ambiguous despite its need to increase the flow of foreign direct investment to its territory.

 

 

Life expectancy in India (2011): 66.8 years
Indian

 

To begin with, the Indian perception of European economic integration was largely of a European community allied with Japan and the United States and forming an economic triangle domination international exchange. India also feared that a ‘Fortress Europe’, isolated from the rest of the world, would emerge, that would consider India as a ‘distant’ partner outside of its strategic sphere. At this time, India was preoccupied by internal questions. Its far-reaching process of reform started at the beginning of the 1990s showed that its economic model was in crisis. So it was that in 1991, the country was forced to accept an International Monetary Fund (IMF) structural adjustment plan to confront a significant financial crisis. Yet this liberalisation, welcomed by the government of New Delhi, by no means signified a rejection of economic regulation. From this viewpoint, the government committed itself to two distinct and diverging paths. On the one hand it began to liberalise the economy, prudently undertaking reforms. Nearly 250 public companies remained, many running considerable deficits, and large swathes of the economy remained under state control. On the other hand, the country developed a veritable economic diplomacy; building ties with neighbouring countries like Sri Lanka, Bangladesh and China. India also stated itself to be in favour of regional integration processes and the intensification of trade relationships with the world’s largest markets.

India and the EU in the 21st Century

India’s economic development is original as it stems largely from services, such as new information technologies with the extension of call centres and Information Technology Consulting Companies: New Delhi receives 40% of foreign direct investment destined for developing countries. It is also one of the areas of recent cooperation established between India and the EU since the year 2000 and takes place through yearly, bilateral summits. Indeed, during the second summit held in New Delhi, the European Union stated that India was starting to emerge as a world leader in the sector.

Little by little, India has emerged as a promising market. With an average rate of growth averaging 7% over the last decade - a GDP that should catch up to France by 2020 - and a population of 1.1 billion, India has become a privileged partner of an EU seeking to strategically reposition itself in Asia. The rise of the power of communist China and the evolution of international political events in the region have lead to EU efforts to further develop relations with stable partners in Asia. In this framework, The European Union is gambling on a strong, yet integrated India regularly reiterates its integration model.

India, an old country of the future
Indian colors

 

The new fields of cooperation referred to during the most recent bilateral summits attest to the European desire of enlarging its partnership with India: putting in place a free trade agreement, cooperation in space technology, India’s participation on the ITER nuclear power station, and most recently, the signing of a cooperation agreement on civil nuclear power in France. India however presently finds it difficult to consider Europe as a united political entity capable of influencing the course of the XXI Century. From India’s perspective, two factors account for the difficulties encountered in the framework of its trade and economic relations [5]. The first is in the institutional domain where decision-making is complex, where multiple levels of power exist, and divergences between member-states prevent the formulation of long-term trade policies. The second factor relates to the reinforcement of a certain protectionism as the EU, hindered by its process of integration and incapable of having a global vision of affairs. 

The Indian response to European integration is thus somewhat mixed. On the one hand, India continues to open up politically towards Asia in the framework of its ‘Look East Policy’ a policy that aims to reinforce its economic and commercial links with its neighbouring countries, including Sri Lanka, Nepal, Burma, Thailand, and Malaysia. On the other hand, India has committed itself to reforming the largest of international institutions, including the United Nations Security Council, The World Bank, and to achieving the status of legitimate nuclear power. It is likely, that over the course of the XXI Century India will look to evolve in both these directions; reinforcing its regional influence whilst playing an increasingly important role on the international scene without allowing international interference in its internal affairs. A consolidated partnership with the great foreign powers is thus essential to realise these objectives.

It seems, through the political dialogue established between India and the EU, as though a veritable convergence of points of view has taken place relating to an issue as important as the fight against terrorism. Nevertheless the disagreements between the two protagonists remain keen. One example is that which appeared during the third bilateral summit held in Copenhagen in 2002 when India and the EU opposed each other on how to deal with the conflict in Kashmir, a question that, for New Delhi, was an internal state matter [6]. A number of analysts and observers are pessimistic that a genuine partnership could arise between the European Union and India, the latter preferring to normalise relations with the United States.

Christophe Jaffrelot criticises the fact that the European Union is in the process of leaving the field of interest of the most promising emerging countries. The Indian researcher, Rejandra K. Jain, shares this view, suggesting that ‘India has [...] difficulty perceiving the European Union as a major actor on the international scene, as much regarding economic as political matters, and still, today, prefers good relations with the United States’. It is important to remember that India and the United States signed a cooperation agreement in the field of civil nuclear power just a few days before the 9th bilateral India-EU summit held in Marseille in September 2008, and in doing so, demonstrated that New Delhi succeeded in making the world’s most powerful state fold on a matter of such importance. The distance covered by India and the EU however is far from negligible in that it has laid the foundations for better knowledge and thus better mutual understanding; an essential step towards the establishment of a stable and durable partnership.

 

© Angelo Giampiccolo; winni; Gleb Vinnikov; runnerphoto – Fotolia.com

[1] « L’Inde proteste à son tour contre le projet de Marché commun » , information note, 13 june 1957, La Documentation française, microfilm n° 151. [2] Pour promouvoir les échanges avec l’Inde, EUROFORUM, Banque d’Information politique et d’actualité , 28 march 1980, La Documentation française, microfiche number DF/IN/046. [3] « Accord de coopération économique et commerciale entre la communauté économique européenne et l’Inde », Journal officiel des Communautés Européennes, document number C 173/4, 14 July 1981, La Documentation française, microfiche n° DF/IN/046. [4] Accord de coopération entre la Communauté européenne et la République d’Inde, documents du Conseil, la Documentation française, 1993. [5] « Le partenariat privilégié de la CEE », Le Soir, Bruxelles, 21 June 1991, La Documentation française, microfiche n° DF/IN/0046. [6] « Visite du Premier ministre indien au Danemark pour une réunion avec l’UE » (Visit of the Indian Prime Minister to Denmark for the reunion with the EU) AFP dispatch, 4 October 2002.   Find out more: 1)   India and Europe in the New Millennium, Rajendra Kumar Jain, New Delhi: Radiant Publishers, 2001 http://www.easternbookcorporation.com/moreinfo.php?txt_searchstring=2684 2)   European Union and India: A study in north-south relations, D.K Giri, Concept Publishing Company, 2001 http://www.indianbooks.co.in/bookmart/index.php?dispatch=products.view&product_id=16655 3)   India and the European Union: The Charade of a strategic partnership, Christophe Jaffrelot, CERI, Mars 2006 http://www.ceri-sciencespo.com/archive/mars06/art_cj.pdf    

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