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EU-India Trade Relations: Now and an even brighter future

Brand Voice
·6-min read

Glenn Cezanne, Managing Director, Time & Place Consulting

17 November 2020, In brief: Glenn Cezanne, Managing Director of Time & Place Consulting looks at the status of political and trade relations between the European Union and India, why business should not shy away from seeking to be present in each other’s markets, and why the future could look even brighter with the right impetus.

There is a lot of potential for business development when looking at two of the world’s biggest markets: the European Union (EU) and India. And, even more so when looking at strengthening the bridge between the two. As Managing Director of Time & Place Consulting (T&P), a global network of primarily Public Affairs, Business Management and Public Relations consultants, it has always been my professional and personal Leitmotif to focus on building bridges, creating synergies, harnessing potential of positive dynamics and helping empower the potential of skills. Especially in light of current global trade dynamics, Brexit and the lingering pandemic, it is even more pertinent to build and create. This is one of the many reasons I wish more attention was paid at political level in the EU towards India, which has some of the richest known history and is the most populous democracy in the World, and that there would be a higher level of momentum in building relations between the two markets than what I see now.

This is why a designated team of T&P Consultants together with PR Signal, a Kolkata-based high-level Public Relations firm founded by Sumit Agarwal have joined forces to engage business development opportunities for Indian companies in the EU and vice versa. But not only that. It is our ambition to strengthen EU-India trade ties with a view of bringing the two markets closer for the benefit of business and society. In essence, we want to establish or strengthen B2B and B2C supply chains. I realise a level of poetry within the motto of PR Signal: “Bridging Relationships”.

Where do the relations between the two global elephants stand? And what are some key reasons?

Firstly, there is no Free Trade Agreement (FTA). There were attempts to launch an FTA when negotiations started in 2007 but these were suspended in 2013 due to several reasons including difference in tariffs on European products and India’s preferences to have more services and professional-oriented visas in the FTA. But, this has not stopped an increase in trade naturally taking its course. Just a few facts as highlighted by the European Commission:

(1) The EU is India’s largest trading partner with EUR €80 billion worth of trade in goods in 2019. This is the same amount as with the US and more than with China.

(2) Furthermore, the Commission notes that trade in services had a big jump from EUR €22.3 billion in 2015 to EUR €29.6 billion in 2018.

It is no surprise therefore that at the 15th EU-India Summit on 15 July 2020 which hosted Prime Minister N. Modi, Commission President U. von der Leyen and Council President C. Michel the non-binding “EU-India Strategic Partnership: A Roadmap to 2025” was endorsed. It lays down commitments to inter alia discuss foreign policy and security cooperation, trade and investment, climate change, ICT, health and food security, and global governance.

Other reasons for cooperation shouldn’t be a surprise either. We are looking at an economic slump in light of Corona and military and trade tensions with China are very prevalent, if not on the rise. Furthermore, a couple of days ago the FTA titled Regional Comprehensive Economic Partnership was signed by the ASEAN states with five other partners, including China.

What is going on in the EU regarding overall trade policy? And what can be derived from current initiatives?

It is also worth keeping in mind that the EU is re-furbishing its trade policy and strengthening its instruments. In mid-2020 a consultation was launched by the Commission on a “A Renewed Trade Policy for a Stronger Europe”. Questions sent out to be answered by anyone included: “How can we use our broad network of existing FTAs or new FTAs to improve market access for EU exporters and investors, and promote international regulatory cooperation ̶ particularly in relation to digital and green technologies and standards in order to maximise their potential?

In May 2020, the European Parliamentary Research Service published a study titled: “Assessing the Potential Impact of an EU-India trade agreement: Cost of Non-Europe Report”. The study argues that “gains from increased trade for the EU are between EUR €8 and 8.5 billion…[and that a]…similar increase in absolute terms is to be expected on the Indian side”.

There is indeed a lot of impetus in Europe to strengthen EU business and look abroad. This provides an excellent opportunity for both sides. The sheer sizes in population, purchasing power, industry and expertise of the EU and India, not least also decreasing dependencies on other countries for raw materials and production.

Why should businesses in India and the EU not wait for an FTA and look towards each other’s markets in parallel to trade discussions?

There is certainly a lot for business to look forward to and a lot of work to be done to push for ideal trade contexts. But, there should also be no fear in entering the other markets in the meantime, even if there is no FTA. The EU and India are host to large and complex markets which are fragmented. Some see this as a problem, but I see it as also bringing opportunity. Even though much of regulation might be streamlined, if I look from the perspective of an SME, different consumer interests, business registration processes, marketing contexts, cultural determinants, main channels for retail, skills focus, adapted infrastructure, etc. make it easier for business to pick and chose their focus rather than looking at a one glove fits all strategy for a large geography. In other words, it is easier to pick your pilot project due to the variety. Large businesses on the other hand might have the resources to pick several pilot projects. In any case, it is important to keep in mind though that EU law determines the principle of mutual recognition: If a product or service can be lawfully sold in one EU country, then it can be legally sold in another EU country. There are certain exceptions of course with regard to health and the environment but in essence it makes it easier to expand your business to the other market “fragments” of the EU.

And not to forget, it is usually the business who have entered foreign markets that usually have a more convincing voice as to the economic, societal and cultural benefits that trade agreements bring. It is those businesses, no matter what their size, who know what they are up against when it comes to trade barriers, that have a better chance of being listened to by decision-makers.

(Syndicated press content is neither written, edited or endorsed by ED Times)