• European Union’s close ties with China are because of its high dependence on the Chinese market.
• Between 1995 and 2012, Germany, the EU’s economic powerhouse, enhanced its trade value by 37%, the largest portion of which came from supply chains in China.
• The EU Chamber of Commerce in China recently released its Business Confidence Survey 2020. The survey stated that most European businesses are chiefly “in China, for China”.
• These companies are hoping for Xi to make fundamental changes by utilising the coronavirus-crisis.
• Challenges
  Political:
• The abrogation of article 370 and 35A and the passing of Citizenship Amendment Act (CAA), 2019 received considerable attention from the EU, with a large number of Members of European Parliament speaking out on possible human rights.
• The formalised and concerted nature of the EU MEPs’ response reveals the high degree of focus the European Parliamentarians have rendered to these decisions.
• The issue of CAA was once again raised during the 15th India-EU Summit.
• This deviates from the previous policy of non-interference in matters that are declared to be internal affairs.
• At the same time, the EU has remained silent when it comes to China’s blatant human rights violations in Xinjiang and Tibet. It did not even question the draconian National Security law in Hong Kong.
• Just recently, Germany has removed the flag of Taiwan from its official website, replacing it with a white triangle and stripping the democratic Republic of China of its identity in response to PRC’s objections.
• It is evident from the aforementioned issues that the EU is tilting support towards an opaque and totalitarian regime while opposing the transparent and democratic functioning according to rules-based global order.

• India and EU launched negotiations on Broad-based Trade and Investment agreement in 2007.
• However, these negotiations were stalled in 2013.
• It remained elusive at the 15th India-EU summit, with India just stating that there is no deadline for the free trade agreement, which is officially called the Bilateral Trade and Investment Agreement (BTIA).
• Though the bilateral trade has grown, it remains well below potential.
• Unlike with some other partners, India and the EU enjoy a balanced trade relationship with bilateral trade.
• Yet, over the years, new trade and investment issues have been added.
• The need for investment protection has been illustrated by the devastating impact of the COVID-19 on European countries and its subsequent disruption of supply chains and manufacturing, which potentially endangers Indian investments in Europe and vice versa.
• The lockdown consequences like the decline in production and exports and temporary suspension of projects have a direct impact on several partnerships.

• India-EU bilateral relations date back to the early 1960s with India being amongst the first countries to establish diplomatic relations with the European Economic Community in 1962.
• The Joint Political Statement signed in 1993 coupled with a Cooperation Agreement signed in 1994 opened the way for strengthening the bilateral ties
• A multi-tiered institutional architecture of cooperation has since been created, presided over by the India-EU Summit since 2000.
• The relationship was upgraded to a ‘Strategic Partnership’ in 2004.
• They adopted a Joint Action Plan in 2005 that provided for strengthening dialogue and consultation mechanisms in the political and economic spheres, enhancing trade and investment, and bringing peoples and cultures together.
• European Union is an international organisation consisting of European Countries, which was formed in 1993.
• It came into force after the signing of the Maastricht Treaty by 28 countries.
• The Maastricht Treaty is also known as the Treaty of the European Union (TEU). Maastricht is a city located in the Netherlands. The Maastricht Treaty was amended thrice.

• The objectives of forming the European Union are listed below.
• To increase political cooperation
• To enhance economic integration by creating a single currency the EURO.
• Unified security and foreign policy
• Common citizenship Rights
• Enhanced cooperation in the areas of judiciary, immigration and asylum.
• European Union was awarded the Nobel Prize for Peace in 2012.

• Nordic countries are pioneers in innovation, clean energy, green technologies, education, health-care, human rights, rule of law — this presents enormous opportunities for India to expand its own strengths by collaborating with these countries.
• India today represents a fast growing economy with annual GDP growth of 7-7.5% over the last few years.
• India presents an ideal opportunity to these countries because of its large market. Many new flagship schemes have been launched by India — like Make in India, Smart Cities Mission, Start-up India, Clean Ganga etc — in which Nordic countries can take active part and provide their expertise.”

• The first India-Nordic Summit took place in April 2018 to explore new areas of cooperation.
• This format is special; the only other country with which the Nordic countries — Sweden, Finland, Norway, Denmark, Iceland — have this kind of engagement is with the US. While economic growth, climate change and global security were identified as key areas of cooperation, the summit is taking place at a time when two Nordic countries are looking at joining NATO, amid a sense of insecurity in Europe.

• Bilateral relations were elevated to the level of a “Green Strategic Partnership” during the Virtual Summit held in September 2020 between Modi and Danish PM Mette Frederiksen. Frederiksen was in India on a state visit from October 9 to 11, 2021, the first visit by a Head of Government following the pandemic.

• The term 'Nordic' is derived from 'Norden' which means, the northern islands. The residents are known as 'Norbdo' which means in the literal term, ‘northern dwellers’.
• A geographical and cultural region in Northern Europe and the North Atlantic are Nordic countries including Finland, Iceland, Norway, Denmark, Sweden, and the Faroe Islands (an archipelago of islands as an autonomous country within the kingdom of Denmark).
• India and the Nordic countries affirmed their support for a rules-based international order and for multilateral institutions and their commitment to work towards making them more inclusive, transparent, and accountable with the aim of addressing global challenges more effectively.
• The Nordic states of Denmark, Norway, Sweden, Finland and Iceland have reported increased trade with India in recent years, accompanied by a swelling Indian diaspora. Interestingly, Finland and Norway share borders with Russia and have lately witnessed increasing tensions with Moscow over the Ukraine war.

• Germany is one of India’s most important partners in Europe, with deep bilateral relations, and also because of its key role in the European Union. India was among the first countries to establish diplomatic ties with the Federal Republic of Germany after WWII.
• India and Germany have a ‘Strategic Partnership’ since May 2000, and it has been strengthened with the launch of the Inter-Governmental Consultations (IGC) in 2011 at the level of heads of government.
• India is among a select group of countries with which Germany has such a dialogue mechanism. During Modi’s visit, the 6th IGC will take place, postponed from last year due to the pandemic.

• President of the European Commission Ursula Von Der Leyen was on two–day official visit to India.
• She has heaped all praises for the robustness of Indian democracy. She went on to say that ‘World Watches When Indians Cast Their Vote’.

• The EU is a political and economic union of 27 member states that are located primarily in Europe.
• The union and EU citizenship were established when the Maastricht Treaty came into force in 1993.
• The EU grew out of a desire to strengthen international economic and political co-operation on the European continent in the wake of World War II.
• It has often been described as a sui generis political entity (without precedent or comparison) with the characteristics of either a federation or confederation.
• The eurozone consists of all countries that use the euro as official currency. All EU members pledge to convert to the euro, but only 19 have done so as of 2022.
• Through successive enlargements, the European Union has grown from the six founding states (Belgium, France, West Germany, Italy, Luxembourg, and the Netherlands) to 27 members.
• This entails a partial delegation of sovereignty to the institutions in return for representation within those institutions, a practice often referred to as “pooling of sovereignty“.
• In the 2016 ‘Brexit’ referendum, the UK voted to leave the EU. The UK officially left the EU in 2020.
• It’s been 60 years since India accredited its first ambassador to the European Economic Community (EEC), the organisation that served as embryo for the European Union.
• Back then, India was a protectionist economy trying to move away from the British colonial era while the EEC consisted of just six European countries.
• Today, the relations between the EU and India are defined by the 1994 EU–India Cooperation Agreement.
• India and the EU became “Strategic Partners” in 2004.

• The EU is India’s third largest trading partner, accounting for €62.8 billion worth of trade in goods in 2020 or 1% of total Indian trade, after China (12%) and the US (11.7%)
• The EU is the second-largest destination for Indian exports (14% of the total) after the USA.
• India is the EU’s 10th largest trading partner, accounting for 1.8% of EU total trade in goods in 2020, well behind China (16.1%), the USA (15.2%), and the UK (12.2%).

Economic Ties

• Bilateral trade: The EU is India’s largest trading partner, while India is the EU’s 9th largest trading partner. It is the second-largest destination for Indian exports after the United States.
• Investment: The EU’s share in foreign investment inflows to India has more than doubled from 8% to 18% in the last decade. This makes the EU an important foreign investor in India.
• Preferential treatment: India is the benefactor of the unilateral preferential tariffs under the EU Generalised Scheme of Preferences (GSP).
• Energy: Both sides have finalised civil nuclear cooperation agreement after 13 years of negotiations called as the European Atomic Energy Community (EURATOM). It involves collaboration in the civil nuclear energy sector.
• Development cooperation: Over €150 million worth of projects by EU are currently ongoing in India. European Investment Bank (EIB) is providing loans for Lucknow, Bangalore, and Pune Metro Projects.

• ‘India-EU Strategic Partnership: A Roadmap to 2025’ was adopted to guide cooperation between India and the EU over the next five years.
• Agreed to establish regular High-Level Dialogue to guide negotiations on Broad-based Trade and Investment Agreement (BTIA) and to address multilateral issues of mutual interest.
• Civil Nuclear Cooperation – Agreement between India-EURATOM (European Atomic Energy Community) on research and development cooperation in the peaceful uses of nuclear energy was signed.
• Adopted declarations on Resource Efficiency and Circular Economy, decided to launch a dialogue on maritime security, renewed Agreement on Scientific cooperation.
• Connectivity Partnership – India and the EU launched in the recent Virtual Summit, an ambitious “connectivity partnership” in digital, energy, transport, and people-to-people sectors, enabling the two to pursue sustainable joint projects in regions spanning from Africa, Central Asia to the wider Indo-Pacific.
• The EU sees a larger role of India in the regional (Asian) and global security – economic architecture, and therefore is working on a new strategy with respect to India.

Way Forward

• As highlighted by EU strategy on India 2018, India EU should take their relations beyond “trade lens”, recognizing their important geopolitical, strategic convergences.
• Finalization of India-EU Free Trade Treaty as soon as possible, for closer convergence.
• Strengthening technical cooperation on fighting terrorism, countering radicalization, violent extremism, and terrorist financing.
• EU can collaborate with India to facilitate connectivity and infrastructure projects in third countries, particularly smaller states in South Asia that often fall prey to power politics and fiscal instability resulting from China’s loans and political influence as part of its BRI.
• Torchbearers of Democracy – To translate their common values into common action, EU and India in can work in third countries to consolidate democratic processes and build capacities of transitioning regimes through strengthening electoral and parliamentary institutions.
• Strengthening Climate partnership – In India’s efforts to increase the use of renewable energy in India, the investment and technology of Europe is of paramount importance.
• A close bilateral relation between India and the EU has far-reaching economic, political, and strategic implications on the crisis-driven international order. Both sides should realise this potential and must further the growth of the bilateral ties with a strong political will.