India has a multi-dimensional relationship with the European Union (EU), its largest trading partner, a major source of foreign direct investment (FDI), an important source of technology, and home to a large Indian diaspora. India no longer regards the EU as a mere trading block, but as an increasingly important political action world politics with a growing profile and presence. After independence, the Government of India took a keen interest in the Common Market from the moment it was first formed, largely because of trade concerns even though there was meagre trade with the West Europe countries till 1957. Indian efforts to establish a new; post-colonial relationship with the European Economic Community(EEC) proved a challenging task since apart from the ‘associated’ overseas countries and territories of the Member States, the Treaty of Rome contained no references to the rest, of the Third World.
British Application for EEC Membership
Indian worries about eventual British membership of the EEC were two-fold. First, Indian exports of manufactured goods and primary products like tea were likely to be displaced by “European products as well as ‘associate’ territories in Britain-India’s key market. Second, the question of British entry also came in the midst of an acute foreign exchange crisis and huge trade deficits, which had to be financed by large-scale withdrawals from the foreign exchange reserves accumulated during the Second World War foreign aid.
India’s policy towards the EEC during Nehru’s era (1947-1964)
It was in the broader context of North-South relations. It was mainly based on political priorities, which because of French insistence focused primarily of Francophone’ countries. Nehru was also apprehensive that if the Common Market became an inward-looking regional grouping and transformed itself into a rich man’s club, the gap between the developed and developing countries would become wider. At no point of time did India seriously consider the prospect of seeking associate membership of the European Community. Six founder countries too were unwilling to offer association in any form to South Asian Commonwealth countries because of the existence of low-wage powerful manufacturing industries.
Securing Market Access, 1963-1973
For a decade (1963-73), Indian efforts focused on securing better market access for India’s major exports and alleviation of its chronic trade deficit with the EEC, which was the largest it had amongst all its trading partners. This was dealt with on a product- by-product basis by the conclusion of annual agreements in whole or in part of the customs duty. Though the EEC introduced the General System of Preferences (GSP) in 1971, India felt that ‘the GSP was not structured to solve the specific problems created for India by its loss of preferential access to the British market. Many of India’s main exports including jute, coir, cotton textiles, and tobacco, were either excluded from the scheme or else subjected to special arrangements.
Commercial Cooperation Agreements
Under the Joint Declaration of Intent, annexes to the United Kingdom’s’ Treaty of Accession (1973), the EEC agreed to examine with the Asian Commonwealth countries ‘such problems as may arise in the field of trade With a view to seek and appropriate solutions. India was perceived as ‘Britain’s baby’ and it was up to the British to action its favour.
The five-year non-preferential Commercial Cooperation Agreement (CCA) that India eventually signed in 1973 contained no new tariff concessions, but provided both a focus and a contractual basis for India-EEC relations. However, conscious development of trade opportunities for India continued to be assigned only a low priority. India took the initiative in 1978 and sought to expand the scope of the 1973 agreement by the conclusion of a new nonpreferential economic and commercial agreement in 1981, which expanded cooperation to more sectors.
India accorded greater priority to the West as a market; source of technology and FDI and became progressively more interesting because of its policy of liberalization and economic reforms (1991), acquisition of nuclear weapons in 1990s and steadily, improving relations with the United States.
Wide-ranging ‘third-generation agreement on Partnership and Development was signed on 20 December 1993 to encompass economic, technological and cultural cooperation, development and investment. The Joint Statement on Political Dialogue (1994) sought to achieve ‘a closer and upgraded relationship’, and expressed the resolve of India and the EU to reinforce and intensify their mutual relations in the political, economic, technological and cultural fields. The European Commission pushed for stronger links in its Communication on EU-India Enhanced Partnership (1996).
The institutional architecture between India and the EU is now quite multilayered. Apart from the Joint Commission and Sub-commissions, other institutional mechanisms include troika ministerial meetings Senior Officials Meetings, meetings between the European Commission and Indian planners, bilateral meetings in the margins of multilateral forums, working groups of specialists (on subjects like export controls, terrorism experts and consular affairs), the India- EU Round Table, the India-EU Energy Panel and its working groups, macro- economic dialogue on financial co-operation, a dialogue on human rights, and a science and technology steering committee.
Annual summits have taken place annually since 2000. Parliamentary exchanges began with the setting up of a South Asia Delegation in the European Parliament. A separate India Delegation was established in September 2009 and The Indian parliament also set up a 22 member Parliamentary Friendship Group with the European Parliament in June 2008 to reflect the strategic partnership. Since 2007, a new format for dialogue and interaction was created when India became a member of the 45-member Asia-Europe Meeting (ASEM).