The EU and India are important strategic partners. India is the 10th trading partner of the EU, after the U.S., China, the UK, Switzerland and Norway, among others; yet, it is the second most populous country on Earth, with a huge market of more than 1.35bn people. From the top 10 trading partners of the EU, India is the country with the most potential for growth, in the bilateral trading volumes. EU-India trade in goods reached €80 billion in 2019. In 2018, the EU had 6000 companies operating in India, contributing to the creation of around 6 million direct and indirect jobs. While this is significant, when we compare it to other major players, one witnesses that there is certainly room for improvement in the EU-India trade and investment relationship. As a comparison, trade in goods between the EU and China was worth over €1.5 billion a day in 2019.

It is well-known that the Free Trade Agreement negotiations have started in 2007, yet they have been suspended since 2013 “due to a gap in the level of ambition”. Some of the hindering factors include market access provisions, particularly for automobiles, wine and spirits, the opening up of the financial services sector (banking, insurance, e-commerce) and the inability to find common ground and ambitious agreements on labour, environment and public procurement provisions. As Commissioner Hogan has recently stated, the conditions have not changed significantly, and the restart of negotiations would require serious and ambitious progress.

With the COVID-19 pandemic however, we now have a new momentum in EU Trade Policy, and generally in international affairs, as this event can be seen as a catalyst for reviewing existing policies and rethinking priorities.

I think the EU-India dimension of EU external action should receive a heightened priority in the future. One good call for action is the splitting of negotiations, as it happened with Singapore and Vietnam for example, between an FTA and an Investment Protection Agreement. While the negotiations on an FTA are put off indefinitely, the Commission has stressed that an Investment Protection Agreement might be feasible. The IPA could then act as a path-opener, and confidence building measure.

This is particularly relevant as India has terminated all Bilateral Investment Treaties with partner countries, including EU Member States, in March 2017, when its Union Cabinet passed a new model framework for BITs. EU investors are thus in dire need of investment protection provisions, given the suspension of all bilateral treaties. The COVID crisis can thus be transformed into a turning point for EU-India relations, with an IPA as its catalyst.

All in all, The EU-India strategic partnership thus deserves a heightened attention and prioritarisation. In the Trade Policy Review, we should include a line on deepening the bilateral trade and investment relationship, primarily through the concrete element of an IPA. This is also an important step for European SMEs, in the ambition to build more international ties, raising competitiveness and boosting innovation. In the International Trade Committee, we will surely bring up this issue, in our efforts to aid the EU’s ambition to diversify its supply chains, and thus bringing more resilience in its trade policy.

These were the remarks of MEP Iuliu Winkler, Vice-Chair of the International Trade Committee in the European Parliament, during an SME Europe event on the future of the EU-India strategic partnership post-COVID19, held on 6 July 2020.