The EU-India Trade Partnership: A Potential Gamechanger in Reducing Reliance on China

The European Union and India have finally joined forces to create the Trade and Technology Council. And it comes at a time when the EU and India are in disagreement over Russia’s invasion of Ukraine. They did, however, reach an agreement on other concerns that had been delaying the implementation of the trading mechanism for years. The agreement is significant since the only other country with a technical agreement with the EU comparable to the one signed with India is the United States. And India’s move to establish such a council will be its first with any of its partners. This strategic coordination framework will make it easier for the two partners to work together to solve problems in trade and investment, trusted technology, and security.

The TTC will be instrumental in coordinating EU and Indian approaches to key issues like artificial intelligence and global supply chains and encouraging the spread of democratic and market-oriented values. Through its Working Groups, the Council will help the EU and India resolve issues on tariffs and counter non-market, trade-distorting practices in their free trade negotiations. This strategic coordination mechanism offers both parties the opportunity to collaborate on 5G, artificial intelligence, climate modelling, and health-related technology. This framework will also promote collaboration by increasing access to digital tools for small and medium-sized businesses, as well as by securing crucial supply chains such as semiconductors. Emerging technological standards, climate and clean tech objectives, competitiveness, and the misuse of technology affecting security and human rights will be critical areas of partnership. In many ways, the setting up of the TTC is a recognition of India’s increasing political importance in an uncertain global strategic environment, but the challenge for India will be to capitalise on this value in economic terms.

Strategizing the Partnership and Cooperating on a bilateral basis 

As the EU tries to engage more deeply in the Indo-Pacific, boosting its cooperation with India is critical. With China’s aggressive ascent, the EU requires a robust alliance and a presence in the Indo-Pacific security architecture. Furthermore, the rapidity with which the EU is revising its Indo-Pacific agenda reflects a growing understanding in Brussels of how China intends to expand its preeminence within the existing world order and potentially fundamentally alter it. So, Europe’s new Indo-Pacific strategic direction and India’s goal of keeping its strategic independence from Europe will help the two countries build a strong and positive relationship.

Notwithstanding the above challenges, the growing realities in the EU-India cooperation provides more than just a basis for mutual benefit; it also demonstrates a strong commitment to enforcing a rule-based order in the Indo-Pacific region. Democracy has also been a place where they have worked together strategically, and if they all work together, they can change the way the new global order works in terms of geopolitics and economics.

The EU and India have a shared goal of securing stability, wealth, and sustainable growth based on common values in today’s fast-evolving global landscape. To attain this objective, they have agreed to concentrate on key aspects like resilient supply chains, connectivity, and environmentally friendly technologies. The Trade and Technology Council (TTC) will hold meetings between ministers every year. The meetings will take place in both India and the EU but in a different place each time.

The TTC is divided into three working groups, which are: Strategic Technologies, Digital Governance, and Digital Connectivity: This group will concentrate on data governance, human-centric digitalization, and the digital connectivity component of the India-EU Connectivity Partnership. It will cover subjects such as 5G and 6G, AI, quantum computing, semiconductors, cloud systems, cyber security, digital skills, start-ups, and digital platforms, among others. This group will also talk about the strategic, political, and security effects of new and emerging technologies, as well as the importance of technology standards and certifications.

Green and Clean Energy Technologies: This group will concentrate on green technologies, with an emphasis on research and innovation, investment, and standards. It will identify areas for mutual collaboration, such as clean energy, waste management, plastic in the ocean, and the circular economy, among others. The group will work to enhance the skills and expertise of people in green technologies.

Trade, Investment, and Resilient Value Chains: This group will promote access to critical components, energy, and raw materials and deal with trade barriers. It will encourage cooperation in international forums like the WTO and G20, and work to advance international norms and cooperation to address global geopolitical concerns.

Learning from other partnerships and Overcoming challenges 

The Trade and Technology Council will offer the political leadership and framework needed to operationalize political choices, coordinate technical activity, and report to the political level in important sectors critical to the long-term growth of the European and Indian economies. Working groups led by relevant agencies, services, or ministries will form the council, turning political decisions into deliverables. For instance, the United States and the European Union have established ten working groups under the direction of appropriate US agencies and European Commission services.

Several obstacles to developing EU-India collaboration in crucial tech industries remain. European firms continue to view India as a difficult market, owing in part to the involvement of different Indian states and regulatory disparities between them. India can act on the opportunity to become a hub for investment and assume a greater role in critical supply chains with trusted partners, including from the EU. Another potential road ahead for the EU and India is to reduce barriers to R&D cooperation for semiconductor companies. Investments should also be made in best practises exchanges, especially in the areas of privacy by design and digital identities. Another way for the EU and India to work together to reduce dependence while upholding democratic ideals is to jointly develop human-centred technology and exchange ideas. The EU-India TTC might engage in mapping collective capabilities and weaknesses in certain supply chains in the technology sector. For such supply chains, the two parties should agree on a set of principles.

Strategically located in the Indo-Pacific region and with the world’s largest population, India will assume an increasingly important role as a geopolitical power. The European Union (EU) and India have the potential to support each other’s aspirations of enhancing strategic independence by minimising dependencies. To achieve this goal, both nations need to collaborate in areas such as military and defence technologies, critical technologies, and supply-chain restructuring. The EU needs to take its relationship with India to a higher, more strategic level if it wants to be seen as a major player in world politics.

For technology ecosystems to work well, raw materials, manufacturing equipment, and finished technology products must be able to move across borders. Trade plays a crucial role in mitigating supply chain weaknesses that persist in specific technologies. Trade and Technology Cooperation (TTC) provides India with the opportunity to be integrated into the existing global technology supply chains and become a vital part of the entire ecosystem.

Another challenge facing the technology industry is that relying solely on industrial strategies is insufficient for driving growth and achieving desired results. The notion that government policies and protectionist measures can safeguard home industries from global competition and help them attain self-sufficiency in crucial technology sectors is a misperception that can hinder innovation and progress. Favourable trade policies can aid in reinforcing and supporting government efforts in the technology sector. The TTC serves as a bridge for India and its local technology industry to access global technology goods and services, particularly in a growing market like the EU, enabling a smoother flow of technological products and services with fewer import and export restrictions.

The significant economic potential between India and the EU should not be overlooked. India’s demographics offer broad economic benefits to both nations as well as other like-minded parties, and this trend is expected to continue as Indian migration to Europe grows. The TTC Agreement can assist the Indian government in establishing a presence in global technology ecosystems and competing on a global scale. Trade policy will always be an important supplement to any government initiatives in the tech sector. The TTC presents a unique opportunity for both India and the EU to use trade to boost their domestic technology sectors while also fostering multilateral cooperation in the field.

[Photo by Prime Minister’s Office , GODL-India, via Wikimedia Commons]

The views and opinions expressed in this article are those of the author.

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