The rise of Asia has been touted to be an extremely significant global phenomenon. The EU has sought convergence on global issues, regional security matters as well as regulatory policy and other economic issues with the countries in the region especially India. A close and consistent approach towards monitoring of EU-India relations is therefore called for particularly in the light of the long and enduring economic partnership and a serious and meaningful bilateral political dialogue.
This book analyses the current trends of the EU-India relationship through content analysis. It shall seek to examine the various aspects of the EU-India equation which are giving it an upward thrust and also the factors which are proving to be a drag on the relationship. The most pertinent issues in the partnership that need to be effectively dealt with have been identified through analysis of the portrayal of EU in Indian newspapers i.e. The Economic Times, The Times of India and Dainik Jagran. The insight, outlook and the perception of the Indian elite belonging to the spheres of politics, business, civil society and media have been consolidated and analysed for the purpose of making recommendations for public policy and concrete policy outcomes. An attempt has been made to fathom the nuances of the EU-India engagement and predict the future trajectory of the relations.
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This chapter traces the trajectory of relations between the European Union and India right from ancient times to the year 1963 when diplomatic relations were established between the two — and further on up to the present scenario. It shall make an attempt to contextualise and identify the very obvious crests and troughs of the relationship. An attempt shall be made to suggest immediate steps and measures that should be taken for further consolidation of the EU-India partnership.
The relations between Europeans and Indians is said to have existed even before the Christian era. The Greeks, who came to ancient India were referred to as Yavanas. The name "India" first appears in Greek literature in the 5 century B.C. in the works of Heaktaios and Heradotos. The word is derived from the Indus River and it originally meant only the Indus region, which then belonged to the Persian Empire. Heradotos, however, had already used the term in a wider sense to denote the whole country — and classical Greek usage followed his example.
Among the colonial powers, it was the Portuguese who were the first to arrive in India in 1498. Portuguese explorerVasco Da Gama discovered India when he arrived in Calicut by sea. The Portuguese made Goa their seat of administration. England's East India Company began trading with India in the beginning of the 15 century. The French were the next to come to India and by the 18century, they captured a sizeable portion of southern India, which included Pondicherry, Karaikal, Yanam, Mahe and Chandernagore near Kolkata in West Bengal. But the French suffered defeats in many of the Anglo-French wars and lost their possessions. Like the Portuguese and the French, the Dutch also had a brief stay in India. They controlled the east coast of Malabar and established trading stations in Travancore, Pipely, Chinsurah and Murshidabad in West Bengal and at Balasore in Orissa. The Danes were the last Europeans to come to India. They established trading posts in Tranquebar in Tamil Nadu, Serampore in West Bengal and the Nicobar Islands. They lost their remaining outposts to the British in India by 1845 (Indianetzone 2009).
It was the British who ruled over India for the longest period, about 200 years, starting from the 15 century. The British rule in India began with the rule of the East India Company, which initially destroyed the Dutch monopoly over the spice trade and went on to rapidly increase and consolidate its position in India and eventually started running the administration of the country. The East India Company faced stiff opposition from the Indian rulers and the local people and consequently the control of the administration in India was transferred from the Company to the British Queen. The British annexed many princely states and formed laws and policies of their own and very soon the entire Indian subcontinent was subjected to British rule. Railways, telegraph and postal services were introduced in India with the intention of ensuring the permanent presence and control of the British in the country.
The people of India were highly resentful of the acts, policies and intentions of the British in India, which led to a revolt against British rule, fuelled by a group of Indian's headed by Mahatma Gandhi, Jawaharlal Nehru, Lala Lajpat Rai and Subhash Chandra Bose. These leaders of India's freedom movement openly declared that they had been inspired by a long list of European thinkers including Voltaire, Garibaldi, Mazzini, Max Mueller, Hunter, Monier Williams, Hobbes, Locke and Rousseau. India finally succeeded in becoming an independent and sovereign country on 15 August 1947. The new constitution of India, which came into being, following this historic change, borrowed a number of provisions from the Government of India Act 1935 and other constitutions of Europe.
Thus as history shows that Europeans made attempts towards advancing their economic interests by political and military means similar to the strategy adopted by other invaders arriving in India in the past. But it was British rule with its "much deeper penetration, that moulded India's colonial experience from near-total economic dependency to the traumatic experience of partition". India's world view and its international identity in the post-independence period were largely shaped by the nature of British colonial rule and the resistance launched against it. The British left behind the legacy of a politico-administrative system which had its own merits and the new Indian government of independent India readily embraced these features which included "Westminster-style parliamentary democracy, military deference to civilian leadership, an independent judiciary and vibrant free press". But it is also true that the Indian experience with British colonial rule has led to a consistent discourse of "mistrust towards the West" in the media and in Indian textbooks. Nevertheless, Europe played a positive role in India as was evident from the "established trade patterns to India's military procurement as a result of the flaring up of the conflict with Pakistan" (Muenchow-Pohl 2012).
India, in time, approached the United States, England and other European countries for steel, armaments, defence and infrastructural technologies. However, the clear message that came from these quarters was that "we will not give all this to you unless you practically join up on our side". The philosophy of nonalignment during the Cold War was not accepted, appreciated and understood in the manner in which India desired. India's request for help and cooperation went unheeded between 1947 and 1953, after which it moved on to choose and accept , in 1955, the Soviet Union as a partner in economic and industrial cooperation. Thus, the European powers rejected all the overtures made by India, which was rather disappointing (Jain 2000:78).
Beginning of the Partnership
It was on 2nd March 1962 that India established diplomatic relations with the European Economic Community (EEC) which was based on a common market for its six member-states that had agreed upon the abolition of custom duties and adoption of a common policy on agriculture and trade (Delegation of the European Union to India1a). It introduced general tariff preferences for 91 developing countries, which included India, under the Generalised System of Preferences (GSP) scheme in 1971, (which also happens to be the year when India was engaged in efforts to liberate East Pakistan, which led to the creation of the independent country of Bangladesh) and consequently the annual rate of India's Gross Domestic Product was 1.71 per cent (Good Governance 2009). Denmark, Ireland and the United Kingdom joined the original six members of the EEC, which was buoyed by its success in 1973 (Europa 2009). Britain happened to be India's most important trading partner at the time and British membership of the EEC led to India's loss of imperial trade preferences.
It would appear that India was now ready to break ties with Britain and assert its freedom following its recognition of the EEC. On the contrary, Britain's membership of the EEC was likely to hurt the Indian economy as it meant that the country would no longer enjoy imperial preferences as before. The change in the status quo had also made it clear that India would require striking a new relationship with Europe. The Joint Declaration of Intent (JDI) concluded between the UK and EEC stated that the problems being faced by Commonwealth countries, as a result of removal of trade preferences, would adequately be dealt with. The brevity of the JDI suggested that this particular issue concerning the erstwhile colonies figured very low in the priority list. France had, in fact, been able to secure many more benefits for its erstwhile colonies in Africa. The topmost consideration at the time was to ensure the smooth entry of the UK into the EEC. The other colonial powers who had ruled over India did not show much concern for its plight as India was largely regarded as "Britain's baby". They shrugged off all responsibility to provide aid and succour to India (Abhyankar 2007: 452).
India's efforts were initially directed towards concluding an Association Agreement with the EEC on the lines of the agreement done with the countries of the Mediterranean Basin, Asia and Caribbean and Pacific (ACP) countries. However, this was denied to India and other countries of South Asia as they were called "non-associables". India's efforts coincided with the Lome Convention, according to which ACP countries would be extended trade preferences including subsidies on agricultural products. Another important process which was taking place at the time was the formulation of Generalised System of Preferences for developing countries and the idea had originated and was inspired from the second UNCTAD Conference held in Delhi in 1968 (Abhyankar 2007: 452-453).
When the negotiations collapsed in 1963, India was relieved for a while as the impending doom of disruption of Indo-British trade and the consequent losses to be suffered by India were swept under the carpet. But India was keen on finding a way to engage and define its links with the EEC. For an entire decade, India busied itself in trying to get better market access for its exports and reduce its huge trade deficit with the EEC which was the largest amongst its trading partners. India made attempts to inch towards this goal product-wise by means of concluding agreements on an annual basis for the purpose of partial or total suspension of custom duty levied on the products. The introduction of GSP by the EEC was not an act of charity but simply a means to maintain relations with erstwhile colonies and developing countries. The GSP did not address the specific grievances and problems being faced by India as a consequence of removal of trade preferences. India's important "exports of jute, coir, cotton textiles and tobacco were either excluded from the scheme or else subjected to special arrangements" (Jain 2011: 224).
India's decision to come up with an entirely new device for charting out relations with the EEC was due to the tact and intelligence of K.B. Lall, the then ambassador to the EEC. The Commercial Cooperation Agreement (CCA) framed by him was used as the template for future trade agreements with other South Asian countries. The CCA retained the provisions of the GSP and included the elements of trade development and trade promotion. It was based upon sovereign equality of two entities and restructured India-EEC relations in such a manner that it would not impinge upon India's bilateral relations with EEC member-states. The first CCA set up a Joint Commission to facilitate interaction between the two partners. The CCA was expanded between 1973 and 1993 in order to include "economic cooperation and investment in keeping with the changing needs and priorities of the relationship". The Council of the EEC Chamber of Commerce was set up in 1982. At this juncture, India-EEC trade was increasing and amounted to 20 percent of India's total trade turnover (Abhyankar 2007: 453). The European Union strengthened its roots in India with the establishment of the EC Delegation in the country's capital, New Delhi in the very next year in 1983 (Delegation of the European Union to India 2001).
The 1990s and the Post-Cold War Period
The EU-India engagement deepened and widened and consequently transformed itself into an inter-twined complex relationship in the post-Cold War period. India and the EU are accorded greater significance as international players than before. EU-India cooperation has witnessed a shift from being solely limited to trade and economic transactions to cooperation in political and security-related affairs. The EC was recognised as India's largest trading partner for a long time and in the 1980s, trade with EC, which constituted 22.8 per cent share of India's total trade, shot up to 29.36 per cent in 1990. It is largely believed that it was the end of the Cold War that provided economic and political impetus to move the relations beyond trade relations. The collapse of the Soviet Union ensured that India was now "freed from the Cold War rubric" and this provided India the opportunity to strike new relationships and form new alliances. The winds of liberalisation, privatisation and globalisation blew across the country, leading to unprecedented economic growth and then caught the attention of the rest of the world. India's growth story was infused with a very high dose of enthusiasm and energy which led to its recognition as an emerging power in the international order. The nuclear test in Pokhran in 1998 was another milestone achieved by India.
The winds of change were brought about by liberalisation of the Indian economy in the 1990s, alongside reformulation of India's foreign policy in accordance with the nature of the emerging world order. Similarly, the EEC was transformed into the EU, which was accompanied by the launching of the Common Foreign and Security Policy. As a result of these changes, the new Asia Strategy of the European Union was launched in order to give adequate attention and priority to countries of the region in the light of their increasing economic and political stature. The document aimed to provide "an integrated and balanced view of the relations between the EU and its Asian partners". However, the Asia Strategy seemed to concentrate more on East Asia and South East Asia and strategic attention directed towards South Asia and India was comparatively minimal. The reason for such a stance of the EU can be attributed to the fact that India had just embarked on the exciting journey towards liberalisation of the country and still had a long way to go in becoming a strong and dependable international economic player. Thus, it took some time for India to be recognised as a formidable actor and critical partner of the EU (Bava 2013).
With the end of the Cold War, India was provided the opportunity to combine normative and realpolitik goals. However, Indian leaders were very slow in making an attempt to utilise this change of engaging with the world. It was only in the early part of the twenty first century that the Indian leaders made a marked effort to reach out to the world. The new decision-makers thought differently from "Indian Cold War leaders". They were of the view that "if India was to pull its weight internationally, it would have to become an economic and regional power". The first wave of economic liberalisation in 1990-91 had involved the removal of bureaucratic shackles on industrial growth, while the second wave emphasised upon resource and infrastructure development. The leaders of the Indian state realised that this could be made possible only through integration with the world economy. Therefore, a vigorous and vibrant diplomatic offensive was launched by India in order to strengthen relations with the major powers of the world which included the EU apart from US, Japan, Russia and China (Kumar 2009: 165-166).
India demanded, in the early 1990s, that its cooperation agreement with the EU should be revisited and political dialogue should go up another level, because EU was not only a trading area for India but also a centre for conducting diplomatic relations with Western Europe which was the more developed part of the region. A third generation agreement on partnership and development was signed between the two partners in 1993. Annual troika meetings have been taking place since 1984 and they are currently taking place under the 1994 Joint Statement on Political Dialogue to further enrich relations in the economic, political, cultural and technological fields.
EU remained the largest trading partner of India in the 1990s. India also received the largest share of development assistance from the EU during this period. Trade with the EU absorbed 26 per cent of Indian exports and one fourth of total Indian imports came from the EU. A total of 60 per cent of the total exports of India to the EU were headed for the UK, Germany and France. An asymmetric trade relationship existed between EU and India. India's share in trade with the EU was marginal when compared to EU's economic relations with other countries. While EU-India trade reached $20 billion, the trade balance with the EU continued to be negative for India. India's trade deficit with the EU was recorded to be $2 billion in 1995. The obstacles that India faced while doing trade with EU included the use of trade protection instruments in the textile sector, as well as in the area of marine and agricultural products. The EU's misgivings were related to the automobile sector and quantitative restrictions on imports. (Jain 2001:138).
However, progress was made to resolve these issues, especially in 1997, through an agreement, according to which quantitative restrictions on imports of about 2400 items were planned to be phased out in about six years. One of the major drawbacks in the relations during this phase was the fact that the major part of "foreign direct investment, joint ventures and industrial collaborations" came from only four out of the 15 member-countries of the EU which included Germany, UK, France and Italy. The other member-states were more interested in engaging with the East European economies (Jain 2001: 139).(Continues…)
Excerpted from "India and the European Union"
Copyright © 2018 Shreya Pandey.
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Table of Contents
2. An Overview of General Perceptions on EU-INDIA Relations
3. The Visibility of EU in the Indian Print Media
4. The Perception of the Indian Elite about the EU
List of Appendices
List of Interviewees
Open-ended Questionnaire for Business, Political and Civil Society Elites
Open-ended Questionnaire for Media Elites