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The physical absence of Mr. Silvio
Berlusconi, Head, European
Union, though, did cause a flutter
on the eve of the fourth India-EU summit, yet the presence of the Mr. Romano Prodi, heading the European Commission, worked like a balm to smoothen the transaction of business and ideas in cooperation with Prime Minister Atlas Bihar Vajpayee at the two-day summit on November 28 and 29 in New Delhi. Memories were still fresh on how the last summit in Copenhagen in October had ended in serious differences. This time, however, it ended with a few positive notes.
Unlike last time, the terrorism and dialogue between India and Pakistan did not spoil the broth. Trade and business dominated the proceedings right from the beginning.
The fourth summit is being hailed as a “new decisive step forward in Indo-European relations”, and has highlighted India’s renewed economic growth and the reduction in poverty levels. Perhaps, the decisiveness comes from the premise that India-EU relationship has assumed “strategic depth and maturity” in recent years with bilateral interaction having been raised to summit-level dialogue since 2000 when the first such summit was held in Lisbon.
There is no dearth of issues between India and EU: Global challenges like international terrorism, environment protectionism and respect for democracy and human rights, besides trade and calls for close cooperation between the two sides. This summit was one more effort to emphasise these issues.
The focus was on bilateral trade and the two sides set a target of 35 billion euros of trade flow by 2005. The two-day summit included a special Business Summit being held in the backdrop of the EU enlarging with ten new members joining the bloc next year.
The EU, already India’s largest trading partner is also an important source of foreign direct investment and the summit pushed forward the EU-India Trade and Investment Development programme. The technical assistance programme is the outcome of collaboration between the European and Indian business communities, the Indian Commerce and Industry Ministry and the European Commission.
The prospects for enhancing trade relations have already been recognised. The leading industry chambers on both sides are enthused over the enlargement of the EU, which will make it the world’s largest trading bloc by 2004, accounting for 20 percent of world trade and contributing over 25 percent of the world’s GDP. The EU now is India’s single largest trading partner accounting for 21.73 percent of exports and 20.42 percent of imports in 2002-3. During 2002-03, trade between India and the EU was valued at $23.86 billion of which India’s exports were estimated at $11.35 billion and imports at $12.51 billion.
New Delhi pays greater emphasis to her ties with EU, with whom it has been seeking a “dynamic partnership”. Thus, the Indian External Affairs Minister, Yashwant Sinha, urged the EU to engage with the “new India” and its buoyant economy and take note of success stories in the scientific and information technology sectors in the recently held summit. He expressed the hope that European countries would have the maturity to deal with the issue of outsourcing of business processes to India in their own interest. The outsourcing statement assumes significance in the backdrop of this country’s outsourcing dreams facing new threats. Recently, the US Computer major Dell, almost decided to stop routing calls from some corporate and institutional customers to its India-based call centre, and take them to the US.
Outsourcing of business processes to India is beneficial as the country has enough human resources and those unwilling to avail this would end up being less competitive, according to Mr. Sinha. Foreign corporates were shifting numerous activities to this country because “we are cheaper and better” claimed the External Affairs Minister. It was not out of charity that outsourcing was being done, he said, but to attain higher competitiveness.
The parallel Business Summit provided a platform to enable industry from both sides to discuss areas for cooperation. Sectoral sessions were held in tourism, manufacturing, chemicals and pharmaceuticals, food processing and information technology, the areas so far identified for greatest focus, with the aim of building synergy between Indian and EU industry.
Delivering the keynote address at the India-E.U. Business Summit, Mr. Sinha conceded that India had a long way to go in terms of reducing tariffs and streamlining procedures. And this is what that EU wants to see earnestly. But Mr. Sinha urged foreign investors to discard the old image of India and recognise the vast changes that had taken place over the years. “India is a happening place now. Please recognise the dynamism which infuses the Indian economy today,” Mr. Sinha said. “We are looking for partnerships between the new India and the new Europe,” he pushed forcefully. The two-day summit had been jointly organised by the Confederation of Indian Industry and the Federation of Indian Chambers of Commerce and Industry, among others.
The Minister took the opportunity to call upon the “smart and energetic” business people of the EU to take advantage of the opportunities arising today or “risk missing the bus”. “The foreign exchange reserves stand at around $100 billion and we have a current account surplus. In fact, we are paying bilateral and multilateral loans ahead of time,” Mr. Sinha rolled out the record book. Not only does the country have a sound industrial base but exports were also rising and more than 30 multinational companies had set up research and development centres in the country, he said.
The set targets of the last Copenhagen summit could not move forward. Hence, Mr. Sinha urged India and the EU to work on the economic and trade front to “achieve and surpass” the target set at the last business summit.
Despite Mr Sinha trying his diplomatic best, some bitter facts did come out from the EC delegation. Earlier, addressing the business session, the EU Commissioner for External Relations, Mr Chris Patten, said that India still retained the reputation of being a hard country to do business with. “Excessive red tape, rigid labour laws and poor infrastructure are the commonly cited constraints by business in the EU,” Mr Patten said. And these still hold true for any foreign participation with India. Though Indian tariffs had come down since the economic reforms began, they were still high when compared to international standards.
EU’s investments are more in China than in India, and New Delhi has been seeking a change in this policy, without annoying Beijing. In an oblique reference to China and the flood of foreign investment to “that country to the East” — the same way in which the E.U. Commissioner, Chris Patten, had referred to it earlier — Mr. Yashwant Sinha said those who invested in India made more money. He questioned the rationale of investors overflying India to reach “that country” despite India having a functioning democracy and fair judicial system. “India retains the reputation of a hard country in which to do business,” he said but “if you make an investment here, then you are likely to get more money here than if you go to a country to the east of us,” the Minister said.
Outlining the advantages of investing in the country, the Minister said not only was the country a democracy, but it also followed the rule of law and had never reneged on any commitment. “There has not been a single instance where justice has not been made available,” Mr. Sinha was straight in his stand. New Delhi had not reneged on any of its international commitments either. As for high tariffs, these were being reduced gradually. “We are on a glide path to have a soft landing, not a crash,” Mr. Sinha stressed.
Earlier, Mr.Patten argued that Indian exporters were more successful in Europe because the E.U. was one of the most open export markets in the world. European exporters to India, however did not find trade as easy which he attributed largely to tariffs, which were still high by international standards.
The Indian Prime Minister dismissed suggestions that India was slow in reforming its economy. The country was already in the “second phase” of reforms and was concentrating on infrastructure development, Mr Vajpayee said addressing a joint press conference with the European Commission President, Romano Prodi, following the two day Summit. Dismissing rumors, he said there was no effort on India’s part to “steal” jobs from the developed world.
Two agreements — one on trade and investment development and the other on customs procedures — were signed in the presence of Mr. Vajpayee and Mr. Prodi. A maritime agreement to improve conditions of sea transport between India and E.U. nations was part of the agreements signed. India and the E.U. also agreed to hold detailed negotiations on India’s participation in the Galileo satellite navigation project. The project, the first satellite and navigation system specifically designed for civil purposes, has roped in China as a member.
Moving aside from trade and business, E.U. and India talked of strengthening the United Nations system and expressed commitment to promoting a pluralistic democracy in the world. Terming terrorism a menace that did not recognise any frontiers, both Indian and the E.U. agreed that there was no justification for its existence in the world. Though these issues are constant factors in any bilateral or multilateral discussions, they are nevertheless serious issues which come up when discussions center on Iraq, Pakistan or the Middle East. To New Delhi’s utter dismay, Mr. Prodi refused to give a commitment on whether or not the E.U. supported India’s entry into the United Nations Security Council. India, in fact, has made no secret of its desire to play a major role in the Security Council even with small countries like East Timor.
Unlike in the last summit, Pakistan came up for discussion minus the left-over bitterness. India’s role in world politics was being stunted by its differences with Pakistan, according to Mr. Prodi, “Tension with Pakistan obstructs India’s role in the world,” Mr. Prodi said, adding that the E.U. was happy with the latest peace initiatives in South Asia. “The E.U. expressed the hope that the process could be continued and differences between the two countries resolved peacefully through dialogue,” hoped Mr. Prodi.
On terrorism, the two sides saw no justification for terrorism and they supported the fight against international terrorism, wherever it occured, regardless of its motives. “As democracies founded on the rule of law, India and the E.U. remain committed to ensuring compatibility of counter-terrorism measures with universally accepted human rights standards and norms,” the joint statement stressed.
Both India and the E.U. want a greater role for the UN in international issues. Both want the world body to play a central role in the restoration of peace and normality as well as the rehabilitation and reconstruction of Iraq. India and the E.U. supported the process of seeking a negotiated settlement in Sri Lanka, acceptable to all sections of society, consistent with democracy, pluralism and respect for individual rights, within the framework of a united Sri Lanka and called for early resumption of negotiations.
On West Asia, both sides expressed deep concern at the resurgence of violence in Israel and the Palestinian territories. They called for the sincere implementation of the “road map” provisions, and in line with the relevant U.N. Security Council resolutions, envisioning two States, Israel and Palestine, living side-by-side, within secure borders. India and the E.U. expressed concern at the continuing threats to security and stability in Afghanistan, including those contained in Security Council Resolution 1510, which was aimed at improving maintenance of peace, security and consolidation of authority both inside and outside Kabul.
Whatever may be the stand of India and EU on regional and international issues, the core of the relationship will always be trade and business in years to come. If New Delhi seeks a more dynamic partnership with the 15-nation strong grouping for mutual benefit, EU in turn is seeking more transparent, simple and early implementation of simple economic procedures in India. Any move further in this regard will remove many of the hidden reservations both sides nurture against each other.
Summing up, the Fourth India-EU Summit in New Delhi recently, gave a renewed push to dynamic ties between the two sides, leaving the bitter Copenhagen memories behind. If the global economy is on the roll, the two sides cannot afford to miss the bus.
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