India and the European Union both stand to gain considerably from building a closer economic relationship. Our mutual trade, and investments in the other’s economy, lie far below their true potential. A new report highlights the challenges and opportunities ahead, and how best to address them.
The EU-India relationship is one that offers enormous opportunity. India is the fastest-growing country in the G20, and is poised to become the world’s 4th largest economy by 2030. It has a rapidly growing middle class and is currently investing heavily in infrastructure, digitisation and the green transition. It also harbours ambitions to take replace China in certain value chains. This is just the scenario that European firms would benefit greatly from; a vastly expanded market and new diversified sourcing opportunities.
At the same time, from an Indian perspective, the European market is an affluent one, offering many export opportunities for both goods and services. It is also a complex market; one where Indian businesses need to connect better to advance to the technology frontier. India also wants to attract more investment from Europe.
There is a growing recognition that - through developing closer relations - Europe and India would both enjoy considerable economic as well as geopolitical benefits. This, therefore, should create a win-win situation; indeed, failing to take the opportunity to grasp it would be a considerable loss. The reality is, however, that many obstacles stand in our way. In fact, given present trends, not only would we not fulfil this potential but we may also even slide backwards in our relations. New unilateral policies, for example in procurement and data in both the EU and India, will make trade more costly and burdensome.
To build a better foundation for our trade relations the EU and India are negotiating a Free Trade Agreement (FTA); however, this is slow process without any guarantee of success. There is also a risk that a deal will lack meaningful real new business opportunities.
Given this situation, and against a backdrop of a growing interest in India from a European viewpoint, the Confederation of Swedish Enterprise has commissioned a report entitled, “India and the European Union in 2030 – building a closer economic relationship”.
This was launched at an event in the European parliament on 27 June 2023. The event was co-hosted by Bernd Lange, chair of the European Parliament committee for International Trade (INTA) along with Morten Løkkegaard, the chairman of the delegation for EU-India relations. The report was presented by one of the authors, Nicolas Köhler-Suzuki, and the event was moderated by Christopher Kiener, chief negotiator for the EU in the FTA negotiations with India. Henrik Isakson, director for trade policy at the confederation, provided introductory remarks.
The report takes the perspective of what could be gained by 2030 by opening up both our economies to each other. It explores this both from an Indian and a European perspective and analyses not only trade and investment policy but also polices for sustainability, technology and security where they effect trade. The work has been carried out by the Observer Research Foundation (ORF) in India and the Jacques Delors Institute in France.
Trade