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MY LIFE (After
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IN A CONCH SHELL
William
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| EU-India Relations |
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Friendship to Strategic Partnership
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The evolution of the European Union came from a regional economic agreement among six neighbouring states—Belgium, the Netherlands and Luxembourg (the Benelux countries) and (West) Germany, France and Italy—in 1951 to today’s supernatural organization of 25 countries across the European continent stands as an unprecedented phenomenon.
Its member states have set up common institutions to which they delegate some of their sovereignty so that decisions on specific matters of joint interest can be made democratically at European level.
Enlargement in 2004, with another 10 nations joining the EU, increased population by 20% to 450 million, and the land area by 23%, generating a combined GDP of 10 trillion Euros. Although the economies of the new member countries are nominally covering with those of the member states, the disparities are very great: GDP per capita in the 10 countries averaged just 46% of that of the EU in 2002. Inflation has fallen substantially to single digits, but it is still significantly higher than that of the earlier member states.
According to the European Commission, member states may expect their total GDP to grow by around 1.5% in the enlarged market with increased access to cheaper goods and services having a deflationary effect.
Growth of EU-India Relations
The relations between India and the member states of European Union have a long history. But EU-India relations really took root in 1963, when India was amongst the first developing countries to establish diplomatic relations with the then six-nation European Economic Community. Over the years, the EU and India have developed a close relationship that covers key areas such as political relations, trade and investment, and economic and development co-operation as well as cultural exchanges.
A strong impetus came from the co-operation agreement on partnership and development that was signed between the EU and India in December 1993 and came into force in August 1994. In July 1996, the European Commission presented a communication, ‘EU-India Enhanced Partnership’, which suggested a number of steps to reinforce this relationship. The council as well as the European Parliament subsequently endorsed the recommendations of the commission.
A quantum leap occurred in EU-India relations in June 2000 in Lisbon with the first-ever EU-India summit, which set the ambitious strategic objective of making the EU ‘the most competitive and dynamic knowledge based economy in the world by 2010’. Since then the EU-India summit has been an annual feature.
Generally speaking, the overall market of the EU is a differentiated one with each member state market having supply, distribution, demand, cultural, and legal characteristics that merit individual attention. Thus, while a pan-European business strategy is a must, specific tactics for market entry or expansion should be considered for each country.
EU-India Trade Relations
The progress in economic relations has been rapid. EU-India trade has grown from Euro 4.4 billion in 1980 to Euro 28.4 billion in 2003 and with a 16.9% growth, to Euro 33.2 billion in 2004. The European Union remains India’s largest trading partner, accounting for 21.77% of India’s exports, and 18.33% of total Indian imports in the year 2003-04.
Trade with the EU represents almost a quarter of India’s exports and imports. But it is just 1.6% of total EU imports of goods, and 0.8% of import of services. Presently, the EU invests 10 times more in China, and its trade is five times larger than India.
During the year 2004, EU’s major items of exports to India consisted of machinery (29.5%), chemicals (9.7%), transport equipment (5.7%) and primary products (6.1%).
During the same period, EU imported from India textiles and clothing (29.2%), chemicals (9.4%), agriculture and allied products (9%), machinery (7.7%) and transport equipment (5.5%).
EU-India Investment Relations
EU is one of the largest sources of FDI for India. However, the current level of FDI from EU is far below its potential. Taking the period from 1991 to September 2004, the total FDI approvals (net of ADRs/GDRs) from EU have been US$17.14 billion, accounting for 25.34% of the total FDI approvals of US$67.65 billion, while the US accounted for 24.30%. The cumulative actual inflows are around Euro 5,173.6 billion, constituting 21.40% of all FDI into India till 30.9.2004. The major countries for FDI are UK, Netherlands, Germany followed by France, Italy and Belgium. Top sectors attracting FDI approvals from EU are fuels (power and oil refinery (24.87%), Telecommunications (17.36%), Transportation industries (9.86%), chemicals (other than fertilizers) (7.57%) and service sector (financial and non financial) (5.98%).
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--By
Special correspondent
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EU-India Civil Aviation Project
The recent liberalization of the civil aviation sector in India and its ensuring rapid growth has underscored the importance of civil aviation to the country and its pivotal role in economic development. EU’s partnership with India in this sector, spearheaded by a Euro 32 million EU-India civil aviation project, took off in 2001. The aim of this project is to improve aviation safety in India, and to foster links between the Indian and European aerospace industries. The project’s funding comes from the European Commission, the Indian Government and the European aerospace industry, highlighting the partnership approach and the key role of the private sector.
Nearly two hundred training courses have been held to date covering subjects such as air traffic management, pilot training, aviation regulation, airworthiness, engine maintenance and crisis management. |
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Earlier Summits
1st Summit (Lisbon, 2000)
The first India-EU business summit was held in Lisbon, Portugal, on 27 June 2000. It attracted over three hundred CEOs from 15 EU member countries. The event was attended by political leaders from India and Portugal (representing the EU Presidency).
The business summit focused on specific sectors, infrastructure, information technology and knowledge-based sectors of pharmaceuticals, R&D, biotech, and financial services and banking.
2nd Summit (New Delhi, 2001)
The second India-EU business summit was held in New Delhi. India was represented by then Prime Minister of India Atal Bihari Vajpayee. EU was represented by Belgian Prime Minister Guy Verhofstadt in his capacity as President of the European Council, and the European Commission President Prof. Romano Prodi.
The business summit focused on four sectors:
3rd Summit (Copenhagen, 2002)
The 3rd India-EU business summit was organized in Denmark. The summit was attended by over 300 high-level industry leaders from India and the EU. This summit focused on building synergies between the two regions in a few main sectors. These sectors were financial services, textiles, biotechnology and infrastructure/ manufacturing.
4th Summit (New Delhi, 2003)
This summit was held in New Delhi on 28 November 2003. Political leaders from both sides attended the summit. The summit focused on many sectors of co-operation. Major areas of focus were agro-food processing, chemicals and pharmaceuticals, environment and energy, ICT, manufacturing and engineering, services, and tourism.
5th Summit (The Hague, 2004)
The 5th summit was held in The Hague, the Netherlands, on 08 November 2004. The EU was represented by the President of the European Council, Dutch Prime Minister Dr. Jan Peter Balkenende, and European Commission President Dr. Romano Prodi. Indian representation included Prime Minister Dr. Manmohan Singh, External Affairs Minister Natwar Singh, and Commerce and Industry Minister Kamal Nath. Major sectors in focus were agro-food processing, biotechnology, chemicals and pharmaceuticals, ICT, and infrastructure. |
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| Sixth Indian-EU Summit
Relations between India and the European Union (EU)
have entered a new phase with both sides committing to jointly tackle
terrorism, and enhancing trade and investment. At the 5th India-EU summit
held at The Hague in 2004, both India and the EU had agreed to upgrade
their bilateral relationship by signing an agreement for ‘Strategic
Partnership.’ The relationship was further intensified and an attempt
was made to implement this strategic partnership during the latest summit
that took place in New Delhi on 07 September 2005. At this 6th India-EU
summit, India and the EU took their strategic partnership to a new level
by endorsing a Joint Action Plan (JAP), resolving to fight global
terrorism and aimed at intensifying political dialogue and strengthening
cooperation in economic, strategic and cultural spheres. “At the top of
the agenda is intensified political dialogue and cooperation, with a view
to meeting common challenges and global threats, starting with terrorism.
We have agreed that there is no place for terrorism in the civilised world
and that we would work together towards achieving it,” said Indian Prime
Minister Dr. Manmohan Singh.
Dr. Manmohan Singh, who was assisted by External Affairs Minister K Natwar
Singh and Commerce Minister Kamal Nath, led the Indian side at the summit.
In his capacity as EU president, British Prime Minister Tony Blair led the
EU side and was assisted by Javier Solana, EU Secretary General and
Representative for Common Foreign and Security Policy; Benita Ferrero
Waldner, EU Commissioner for External Relations and European Neighbourhood
Policy; and Peter Mandelson, EU Commissioner for Trade.
The JAP lays the framework for widening cooperation over a range of issues
including terrorism, strengthening UN peacekeeping and establishing a
security dialogue on global and regional issues as envisaged by the
strategic partnership. Both sides agreed to establish a security dialogue
and intensify the joint effort to fight terror by blocking terror funds
and rooting out money laundering. Both partners also agreed to establish a
high-level trade group to explore ways to increase trade and commerce.
Greater Market Access
Addressing the special plenary session of the summit, the Indian Prime Minister called for dismantling non-tariff barriers to push trade and economic cooperation between the two partners. He said that there was a perception in Indian trade and industry circles that the European market was becoming increasingly difficult to penetrate. He said, “As tariff barriers disintegrate, non-tariff barriers suddenly come up.” The Prime Minister pointed out that although India had comparative advantage in the production of a number of agricultural commodities, many of them find some form of discrimination and trade protection in the EU market. He felt that addressing all such issues could increase the bilateral trade from less than two percent of EU’s total trade to a more healthy level. He welcomed the setting up of the joint working group on SPS/TBT (sanitary & phytosanitary and technical barriers to trade), which could look into the problem.
British Prime Minister Tony Blair made a strong case for greater opening up of the Indian economy. He said, “The future clearly belongs to opening up the economies. Globalization is not a matter of debate, it is a reality. The issue for policy makers is how to manage its consequences.” He further added that though the globalization frightened people as it led to insecurity, it was always better to be on the side of opening up than closing down.
Despite the differences, the two leaders expressed their commitment to work together to ensure enhanced bilateral economic and political cooperation. Dr. Manmohan Singh pointed out that the India-EU business summit had evolved as an effective forum for dialogue and exchange of views, which can play a constructive role in strengthening the strategic partnership. He disclosed that the Indian government had cleared the purchase of 43 aircraft from European plane maker Airbus for state-run Indian Airlines for around US$2.2 billion (1.2 billion pounds).
Tony Blair and Manmohan Singh asserted that they share a common commitment to democracy, pluralism, human rights and the rule of law and seek to pursue economic progress and prosperity for people in a peaceful, stable and secure global environment. Blair also backed India ‘s bid for a permanent U.N. council seat, saying the body’s current make-up was outdated, but said that the EU was split over its bid. Both sides also decided to hold dialogues on migration and consular issues in the context of the opportunities and challenges flowing from the large-scale movement of people between India and the EU.
Commerce Minister Kamal Nath, earlier in the day, while addressing the 6th India-EU Business Summit expressed India’s concern over excessive anti-dumping measures adopted by the EU. He said that Indian agro and marine products face acute access problem in EU countries. He urged the EU to address the issue of non-tariff barriers to India’s export and liberalise the policy so as to facilitate the free movement of professional to increase the economic engagement between the two trading partners.
“Indian trade and industry circles feel that while Indian economy has liberalised and markets have been opened up offering new vistas to global trade and industry, reciprocal benefits have not flowed from the developed world to us,” said Kamal Nath. “While tariffs may be low, the developed world markets are becoming increasingly difficult to penetrate. The mounting stringency of standards, cumbersome and complex rules and procedures as also frequent use of trade defence instruments were emerging as serious barriers to enhance economic cooperation,” he added.
In the services sector, Kamal Nath said that the EU should look at outsourcing as a business cooperation method, which serves the interests of both sides and strengthens competitiveness, and not as something that detracts from its own prosperity. Terming free movement of professionals crucial in enhancing trade, Nath said, “there is need to facilitate professionals to travel if this type of economic engagement is to be properly serviced.”
He said that Europe had a misconception about outsourcing from India and there was a need to end it. “The outsourcing operation from Europe to India has picked up pace in recent years. However, sometimes there are concerns in the EU about loss of jobs in Europe,” said Nath.
“I believe this misconception must be removed if Europe is to remain on a growth path and achieve the Lisbon agenda, the target of becoming the most competitive economy, then the EU will have to look at this synergy,” he added.
Similar views were also expressed by the EU trade commissioner Peter Mandelson. Stating that India could achieve considerable economic progress only by liberalizing more, Mandelson said that India could attract adequate levels of foreign direct investment and increase its exports through greater openness in the ongoing Doha Round. |
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