• After China and the US, the EU is India's 3rd largest trading partner. Bilateral trade between India and the EU rose to over $116 billion in 2021-22. The EU is also the 2nd largest desitnation for Indian exports after the USA. India is one of the major trading partners of the EU. 
• Over 6000 European Union companies are operating in India providing direct and indirect employment to over 6 million people.
• Since 1970s, India is a beneficiary of preferential tariffs for its exports under the EU's Generalized Systems of Preferences (GSP).
• The EU is one of the largest sources of Foreign Direct Investment (FDI) for India. FDI inflows from the EU to India were €5.48 billion in 2012 and €3.2 billion in 2013. Indian investments in the EU28 were €0.4 billion in 2013. The most important EU countries for FDI inflows into India in 2013 were the UK and Germany (with both investing €0.9 billion each), followed by Italy (€0.6 billion) and Belgium (€0.2 billion).

Strategic Importance

• Though as a non-state entity it is not a full United Nations (UN) member, the EU is a signatory to a large number of UN agreements and carries out civilian and military missions under UN mandates. In recognition of its increasing global governance role, the EU has held, since May 2011, an enhanced observer status in the UN General Assembly and its committees, which basically grants it most member rights except for the vote and the possibility to get elected to the Security Council.
• India can secure some friends for support regarding its claim for a permanent seat in the Security Council.
• EU can provide a counterbalance to the emerging hegemony of the US in the world.

The Way Ahead

Like India, the EU seeks to become a global political player on top of being a great economic power. As the global power dynamic shifts, both are trying to define the “Europe is a key trading partner of India and very important investor of capital. It is important, however, that the levels of bilateral trade between India and Europe be improved. Further transformation of the India-EU relationship would require a two-pronged strategy of sustaining traditional links and also exploring new linkages, for instance, in knowledge industries i.e. information technology, biotechnology, pharmaceutical, etc. In political terms, the relationship has already seen steady institutionalization, with Summit-level interaction between India and the EU. The strategic partnership between India and the EU is based on shared values such as democracy, pluralism, and liberalism-all values of open, inclusive societies.”

• The relations between India and the European Union (EU) have been historically cordial, with diplomatic relations going back to 1962.
• The relationship evolved only in the period after the Cold War ended. In 1996, the EU and India signed an Enhanced Partnership Agreement, leading to the first summit in 2000 in Lisbon.
•  India is one of the few select countries in the world with which the EU has regular summit-level meetings.
• The 2004 summit in Hague was important because it was there that India and the EU decided to elevate the relations to the level of Strategic Partnership, and in 2005 agreed to a Joint Action Plan (JAP). The JAP has laid down the foundation of the India-EU Strategic Partnership Agreement.
• India and the EU have evolved a common platform of interaction, which is, however, not stable when it comes to global forums. For example, both India and the EU have adopted different parameters based on their respective national interests while interacting at the level of climate change, WTO, and so on. Despite these differences, the relationship, otherwise, stands in good stead. This is also because at the bilateral level with France, Germany, and the UK, India has strategic partnerships which have added depth to the overall relations with the region.

Political Dialogue

The first India-EU Summit took place in Lisbon in 28 June 2000 and marked a watershed in the evolution of the relationship. Since then, fourteen annual Summits have been held, the last one in New Delhi in October 2017.

Areas of focus were

Bilateral Trade and Investment Agreement (BTIA)

• cooperation in the field of security,
• finalization of an agreement on R&D cooperation in the peaceful use of nuclear energy,
• research, and
• innovation cooperation, and enhanced cooperation in energy

Importance of EU for India

Economic Importance

• EU is an important trade and investment partner of India.
• EU is India's 3rd largest trading partner, accounting for €88 billion worth of trade in goods in 2021 (10.8% of total Indian trade).
• EU is the 2nd largest destination for Indian exports (14.9%) of the total.
• India is the 10th largest trading partner of the EU, accounting for 2.1% of EU's total trade in goods in 2021.
• Trade between India and the EU increased by about 30% in the last decade while the trade in services reached €30.4 billion in 2020.
• Eu is a leading foreign investor in India. The EU's share in foreign investment stock in India reached €87.3 billion in 2020, up from €63.7 billion in 2017. Though, this level of investment. But it is far less than the EU's investment in China (€201.2 billion) and Brazil (€263.4 billion).
• India's balance of trade in goods and services with EU is in favor of India.

????Issue of contention between India & EU

• Since 2007, India and the EU have been negotiating a Bilateral Trade and Investment Agreement (BTIA) or the FTA. However, the BTIA/FTA negotiations have not yet delivered the results as of now. Even up till 2017-18, the BTIA has been stuck on a number of issues and no final agreement has been reached.
• Another issue holding up the trade talks has been the EU not granting “data secure” certification to India - a condition that facilitates the cross-border transfer of personal data, the key to a number of companies’ services, especially in the IT industry.
• It will be no easy task for the government to align its laws to a standard required by the EU to get the appropriate certification.
• The movement of skilled workers from India to developed countries is made difficult with barriers to overcome in terms of salary thresholds, recognition of qualifications, visa fees, social security, and so forth.

India-EU Summit 2021

• The 2021 India-EU Summit was held in May 2021.
• Highlights of the India-EU Summits:

1. Emphasis on public-private partnership, and incentivization of private investment - this is to be done through leveraging public funds together with global capital flows (including sovereign wealth funds and pension funds) to spur private investment in sustainable projects, through tools such as direct investments, Infrastructure Investment Trusts, green bonds infrastructure debt funds, real estate investment trusts, and export credits;
2. Four thematic areas of comprehensive connectivity - first, digital - increased access to digital services with high protection of consumer and personal data; second, transport - promote better planning of regulatory frameworks, interconnection of transport corridors, and security of transport, smart and sustainable mobility and identifying joint investments in port sector; third, energy - more interconnected regional platforms, market-driven transformation towards reliable and sustainable energy solutions, modern systems, and environmentally friendly solutions; fourth, people-to-people - enhanced cooperation in education, research, innovation, culture, and tourism. 
3. Sustainable connectivity in third country and region - to promote transparent, inclusive, and rule-based connectivity between EU and India ad with third countries and region. Three key regions for cooperation are identified - Africa, Central Asia, and Indo-Pacific.