Growing ties

The India-European Union (EU) summit, held last week in Brussels, has given indications that the strategic partnership between both is gaining momentum. The benefits of deeper and wider economic ties between the two sides are evident from the  progress made in the last few years.

The agreements at the summit covered a broad range of issues like joint efforts to counter terrorism,  improvement of cultural ties, fine-tuning of extradition procedures and more importantly, expediting the finalisation of a free trade agreement (FTA).

Many member countries of the EU are not in the pink of economic health. But they have developed economies and markets. India has a growing economy. Better access to European markets can help India and the EU can benefit from India’s increasing economic strength.

The most important news from the summit was that the FTA, which has been under discussion since 2007, might be concluded by March-April next year. According to the joint  declaration after the summit, the ‘contours of a final package’ have been agreed upon. There have been many tricky issues like child and human rights, climate change, movement of professionals and intellectual property rights which had to be addressed in the negotiations on the FTA.

Some of the issues have an important bearing on the welfare of marginal farmers and small investors in India and prime minister Manmohan Singh has assured that safeguards to protect their interests would be instituted in the agreement. Free movement of people is important for India which has a growing pool of technical persons, in the context of the curbs being imposed by some EU countries. Indian products face difficulties in EU countries over IPR-related issues. If these issues are sorted out to the satisfaction of both sides  mutual trade and investment can grow much faster.

There is scope for large EU investments in India in areas like infrastructure development, technological co-operation, research in clean energy projects and education. The trade between India and the EU is now valued at $ 92.2 billion and it is estimated that it can increase to $ 134 billion in the near future and exceed $ 237 billion by 2015 if the trade agreement is put in place now. Diversification of  Indian trade, which is now dominated by China, the US and Asean countries, is also good for the economy.