Context: India and the European Union (EU) on Saturday announced their decision to resume negotiations for a balanced and comprehensive trade agreement after a gap of eight years and unveiled an ambitious connectivity partnership, during a virtual meeting between Prime Minister Narendra Modi and leaders of 27 member nations of the bloc.

• In his remarks, PM Modi invited the EU to support a proposal by India and South Africa to waive patents on COVID-19 vaccines so that there can be equitable vaccine access for the entire world, officials said.
• However, there was no concrete decision on the matter from the EU side, according to EU officials.
• The meeting, participated by leaders of EU member states as well as the top leadership of the EU, also decided to launch negotiations on two other key agreements on investment protection and geographical indications.
• In this edition of Big Picture Picture we will analyse India-EU trade ties.

Key Points
Free Trade Negotiations

• Agreed to relaunch free trade negotiations by resuming talks that were suspended for the Bilateral Trade and Investment Agreement (BTIA).
• India and EU had launched talks for having a wide-ranging Free Trade Agreement (FTA), officially called broad-based BTIA, long ago in 2007.
• The BTIA was proposed to encompass trade in goods, services and investments.
• However, the talks stalled in 2013 over differences on market access and movement of professionals.
• The EU was India’s largest trading partner in goods 2019-20, ahead of China and the US, with total trade close to USD 90 billion.

Connectivity Partnership

• Launched an ambitious and comprehensive ‘Connectivity Partnership’ which is focused on enhancing digital, energy, transport and people-to-people connectivity.
• It is based on the shared principles of social, economic, fiscal, climate and environmental sustainability, and respect for international law and commitments.
• It will catalyse private and public financing for connectivity projects. It will also foster new synergies for supporting connectivity initiatives in third countries, including in the Indo-Pacific.
• Also signed the contract for the second tranche of USD 150 million from the EU for the Pune Metro rail project.

Climate Change

• Reiterated their commitment to achieving the goals of the Paris Agreement and agreed to strengthen joint efforts for mitigation, adaptation and resilience to the impacts of climate change, as well as providing means of implementation including finance in the context of Conference of the Parties (COP 26).
• India welcomed the EU’s decision to join the Coalition for Disaster Resilient Infrastructure (CDRI).

Technology

• Agreed to enhance bilateral cooperation on digital and emerging technologies such as 5G, Artificial Intelligence (AI), Quantum and High-Performance Computing including through the early operationalization of the Joint Task Force on AI and the Digital Investment Forum.

Strengthening Partnership

• Desired to further strengthen the India-EU Strategic Partnership based on a shared commitment to democracy, fundamental freedoms, rule of law and multilateralism.
• India appreciated the prompt assistance provided by the EU and its member states to combat its second Covid wave.
• India also requested the EU’s support for its joint proposal with South Africa for a Trade Related Aspects of Intellectual Property (TRIPS) waiver on vaccine production-related patents in the World Trade Organisation (WTO).
• Recently, the US has supported the proposal. However, India failed to secure the support of the European leaders.

Suggestion

• India-EU Leaders’ Meeting has set a significant milestone by providing a new direction to the Strategic Partnership and giving a fresh impetus for implementing the ambitious India-EU Roadmap 2025 adopted at the 15th India-EU Summit held in July 2020.
• There is a need for comprehensive trade agreement that brings in strong rules, removes barriers to trade in goods and services and investments and opens up free markets. Addressing the mutual trust deficit, facilitating people’s mobility and connectivity can improve mutual understanding and create opportunities for innovation and growth.
• Enhanced business cooperation between EU and India can diversify their strategic value chains and reduce economic dependency—notably on China.

Road Ahead

• India and EU are taking strides in the right direction to take several key aspects of the ties forward. Progress on an FTA is a welcome move even though there is a long way to go. Both sides have been proceeded with an eye on China. However, we can't expect too much of support from the EU on the China front because they all have a special relationship with China and that of economy and economics trumps everything else. They are just looking at alternatives at the moment to secure their own futures and that's why seem to be looking towards India. We will see a lot of collaboration on the vaccine front however between India and EU and other like minded countries as well and going forward we will witness the coalition of the willing on issues of mutual interest with China not being a part of most of them.