An India-EU Trade Pact May Still Remain Elusive

Context: India- European Union (EU) trade pact may remain elusive as COVID-19, Brexit, and international tensions have unsettled the EU and exacerbated its internal discords.

Factors necessitating India-EU Partnership:

• Democratic similarities: EU and India are well suited for a special relationship as they are the largest democracies and unions of linguistically, culturally and ethnically diverse States.

Factors that make India-EU trade pact elusive

• Issues with Comprehensive Free Trade Agreement 2007: Movement of professionals, labour, human rights and environmental issues, India’s high tariffs, inconsistent tax regime and non-payment of arbitral awards.
• Turbulence in the EU: Before COVID­19 and Brexit, the EU had the same GDP as the United States, however, it is now facing the following problems:
  • Structural lack of unity: E.g.
    • It took months to agree on a long-term budget and a COVID-19 recovery package due to objections from Hungary and Poland.
    • Germany, the Netherlands, Portugal and others are uncomfortable with the prospect of building larger military capabilities while countries like France support such a move.
  • Breach of the rule of law: for making a strategy to deal with China, Russia, Turkey and Iran. 
  • Impact of COVID-19 pandemic: e.g.
    • Riots in the Netherlands for the first time in 40 years
    • Resignation of the Italian Prime Minister. 
    • Divisive Vaccine Nationalism: Germany had negotiated a separate vaccine contract.
• Shadow of Euroscepticism: Germany (Alternative for Germany) and the Netherlands (Geert Wilders) have strong Eurosceptic movements like that of Britain (Brexit).
• EU’s drive for greater self-reliance: In security, economics, supply chains and climate change.
• Neutral approach towards China: Underlined by the EU-China Comprehensive Agreement.

Conclusion: Trade agreements with India is the least of the EU’s problems as it has to address innumerable and diverse problems between the member countries without further widening existing ruptures.