Prime Minister Modi’s visit from May 2-4 to Germany, the summit with Nordic countries and the halt in Paris to meet President Macron are part of India’s desire to strengthen ties with Europe. The invitation to the President of the European Commission Ursula von der Leyen to India fitted into this reinvigorated outreach to Europe. That Modi was present when she made the inaugural address at the Raisina Dialogue in April was a calculated gesture. Several European foreign ministers were invited to this Dialogue to underline the heightened attention being paid by India to Europe.
The EU is India’s third largest trading partner after the US and China, with a total trade in goods and services valued at over US $100 billion in 2020. The trade balance is marginally in India’s favour ($4 billion). This contrasts with our massive trade deficit with China ($70 billion) and ASEAN ($24 billion). Between April 2000 and March 2020, FDI inflows from the EU to India were valued at $109.55 billion. In addition, over 6,000 EU companies are operating in India.
With India deciding not to join the Regional Comprehensive Economic Partnership (RCEP) because of the China factor, negotiating trade agreements westwards has become a priority to avoid being isolated within a global economy getting fractured into economic blocs for various reasons: rising anti-globalisation sentiment in developed economies, the US becoming more inward-looking, the shocks to the global economy from the COVID pandemic, consciousness of the dangers of a single country dominance over critical supply chains and raw materials, the weakening of WTO’s role to supervise a rules-based international trading order, and the like.
India-EU negotiations on a free trade agreement (FTA) have now begun anew; with the UK the target is to negotiate one by the end of this year. As part of our shift westwards, we are also in talks with Canada on a trade agreement. The FTA with Australia, although not part of Europe, or with UAE shows that we are strengthening our economic ties outside Asia.
Engaging with Germany
In Germany, which is not only India’s biggest economic partner within the EU but also economically dominates the EU itself, the political transition there after 16 years of Merkel’s rule made it opportune for Modi to visit the country and at the earliest develop an agenda of bilateral cooperation.
This, as reflected in the joint statement, includes a call for a reformed multilateralism and overdue reform of the UN Security Council to reflect contemporary realities, but while mentioning the “group of Four” there is no reference to their joint bid (with Japan and Brazil) for permanent membership. (With the collapse of Germany’s relationship with Russia over Ukraine, its prospects of permanent membership have receded further as a Russian veto would be inevitable). Germany has expressed its “steadfast support” for India’s NSG membership.
Germany’s growing engagement with the Indo-Pacific region (the language on Indo-Pacific in the joint statement is less robust than in our statements with the US or France), India-EU connectivity partnership (the potential has to be tested), close cooperation during India’s G20 presidency in 2023 and a focus on energy, with sustainable development goals (SDGs), energy transition and climate change, were issues that figured in bilateral discussions. Germany is specially engaged on these issues, especially those of energy, having phased out nuclear energy and building huge reliance on renewable energy.
With a view to deepening security cooperation, both sides agreed to begin negotiations on an agreement on the exchange of classified information and reconvene the Defence Technology Sub-Group meeting.
Other outcomes of Modi’s visit are reflected in the area of just energy transition pathways: an Indo-German Partnership for Green and Sustainable Development for which Germany will make available additional commitments of Euros 10 billion till 2030 (appreciated specifically by Modi), an Indo-German Green Hydrogen Road Map as well as triangular cooperation in third countries to help achieve sustainable development and climate change goals. (Triangular cooperation is mentioned in our joint statements with other countries too, but in practice is difficult to realise). The two sides have agreed to create a biennial ministerial mechanism to provide high-level political direction to the partnership.
WTO reform and making supply chains more resilient, diversified and responsible were issues on which both sides agreed, with the German side including its pet caveats about “upholding international environmental, labour and social standards”. (Another pressure point Germany has brought into the discussions is the importance of strengthening bilateral cooperation in fighting child and forced labour). How this gets translated into shifting of German investment to India to ensure trustworthy supply chains remains to be seen, as this is also tied up with an investment protection treaty with EU and other issues that our western partners raise regarding the hurdles they face in establishing themselves in the Indian market. Germany’s biggest trading partner is China, with Euros 245.5 billion of two-way trade in 2021. (Total India-Germany trade is around Euros 21 billion). Both sides expressed satisfaction on the launch of the India-EU Trade and Technology Council to address the challenges at the nexus of trade, trusted technology and security.
The initialing of a Migration and Mobility Partnership — to be signed expeditiously — which will facilitate the movement of students, professionals and researchers was an important outcome.
The joint statement carries the standard platitudes on the situation in Afghanistan. The language on terrorism, including the term cross-border terrorism, meets our requirements, as also the reference to the FATF.
India has been invited to the G7 meeting to be presided over by Germany in June, contrary to speculation that India may not receive an invitation because of our stand on Ukraine.
The overhang of the Ukraine crisis on the visit was untimely, given the concerted western effort to put India on the defensive, including by Germany, over its neutral position on Russia’s invasion of Ukraine. Chancellor Scholz has, despite his initial moderation, buckled under the US and internal pressures within the coalition as well a surcharged public opinion to toughen Germany’s posture on Russia. For domestic reasons he had to reflect this hardened posture in the joint statement with India as well as at the joint press conference, fully knowing India’s position expressed in the UN and outside.
The German side obviously insisted in including in the joint statement its “strong condemnation of the unlawful and unprovoked aggression against Ukraine by Russian forces”, even if it brought out formally the difference in position of the two countries, which is normally avoided. The other agreed para on Ukraine conforms to India’s stated position.
Dialogue with Nordic Countries
Modi’s bilateral visit to Denmark and the summit with Nordic countries hosted by the Danish Prime Minister is an effort by India to reach out to the smaller powers in Europe, beyond Germany and France, in a bid to broaden understanding with individual EU countries which, in turn, will aid India’s relationship with the EU at Brussels. Even these smaller European countries have contributions to make in niche areas where they have the expertise to contribute to India’s development efforts. These are the areas of energy transition, green hydrogen, renewables, climate change, and so on.
With Denmark, India’s position has politically evolved from the time of the Kim Davy Purulia arms drop episode. The Green Strategic Partnership established between the two countries in October 2020 followed by Danish PM Frederiksen’s visit to India in October 2021 has broadened bilateral cooperation, which has no doubt been consolidated by Modi’s visit.
The shared areas of cooperation identified are climate action, green growth and energy diversification, besides health, shipping and water-related technologies, with a focus on green hydrogen, an energy dialogue at ministerial level, planned Danish support for the work of the International Solar Alliance and urban and rural water supply. An agreement on setting up Centres of Excellence on Green Shipping and Dairy was announced during the visit, as well as a Letter of Intent on Migration and Mobility. The two Prime Ministers welcomed Danish investments in India especially in renewable energy, water, terminals and port modernisation and expansion, food processing and engineering sectors, and India’s investments in Denmark especially in the Information Technology sector.
Modi and Frederiksen affirmed support for diversified, resilient, transparent, open, secure and predictable global supply chains. Interestingly, it was noted that India is the country where Danish companies have the largest number of employees outside of Denmark.
Ukraine, of course, had to figure in the discussions. In the joint statement, as in the case of Germany, identical language has been used by Denmark to condemn Russia, while the agreed para does not depart from India’s stated position. Denmark’s support for India’s permanent membership in a reformed UN Security Council is mentioned.
Modi also met the leaders of the four other Nordic countries, Norway, Sweden, Iceland and Finland at the Nordic summit. The broad subjects of cooperation identified were green transition, climate change, the blue economy, innovation and digitalisation. The Prime Ministers agreed that the blue economy can deliver economic growth, new jobs, improved nutrition, and increased food security. They saw opportunities for increased cooperation in the Arctic on polar research, climate and environmental issues.
Importantly, the Nordic countries reiterated their support for India’s permanent membership in a reformed and expanded Security Council. The reform of the World Trade Organisation as well as strengthening collaboration on global health issues, including pandemic preparedness and response, were identified as other areas of cooperation.
The Stop Over in Paris
Modi’s decision to stop over in Paris to meet President Macron after his re-election was a personal gesture that reflects the deepening strategic partnership between the two countries. The current turmoil in Europe has far reaching implications not only for the future of Europe and our partnership with it but also for the world at large in view of its de-stabilising effects on energy, food, fertiliser supplies, inflationary pressures, disruption of payment channels globally, and so on. While Macron has condemned Russia and is supplying arms to Ukraine, he has also kept open the channels of communication with Putin. It was important for Modi to get Macron’s perspective on the ongoing conflict in Ukraine, the US determination to prolong it as much as possible in the declared hope of ousting Putin from power, and Europe’s perspectives as it would suffer the most from this crisis.
According to the Indian briefing, there was a broad understanding of each other’s position on the Ukraine issue and its “cascading effect”, with the two sides agreeing to coordinate constructively in the evolving situation. Macron has highlighted the issue of food security and the FARM initiative in which India will play a big role.
On the Indo-Pacific region, besides bilateral cooperation, India and France will continue to develop new partnerships in various formats with like-minded countries in the region and within regional organisations, as stated in the joint statement.
As part of a concerted EU strategy, the joint statement with France also has two versions on the Ukraine conflict — the standard EU version condemning Russia which France repeats and another formulation that conforms to India’s known position.
The two sides will back a coordinated, multilateral response to address the risk of aggravated food crisis because of the conflict in Ukraine, including through initiatives such as the Food and Agriculture Resilience Mission (FARM), the role of India in the latter being highlighted by Macron.
On Afghanistan, the known formulations are used. Both sides welcomed the ongoing intense cooperation across all defence domains. They noted that maritime cooperation between India and France has reached new levels of trust. They underscored that the long-standing armament cooperation is testimony to the mutual trust between the two sides. Based on this both sides agreed to find creative ways for France’s deeper involvement in the “Atmanirbhar Bharat” efforts in advanced defence technology, manufacturing and exports, including encouraging increased industry to industry partnerships.
The two sides have agreed on setting up a bilateral strategic dialogue on space issues, with the first dialogue to be held this year at the earliest. India will be the first Country of the Year at this year’s edition of Vivatech, Europe’s largest digital fair, in Paris. Building upon the implementation of the Indo-French roadmap on cyber security and digital technology, India and France reiterated their willingness to deepen their cooperation on exascale technology, which includes making supercomputers in India. Both sides expressed their willingness to coordinate actively in the run up to the third edition of the “No Money for Terror” international Conference to be hosted by India in 2022.
India has invited France to participate in its initiative to make India a Green Hydrogen Hub under its National Hydrogen Mission. Both sides will continue to work jointly to increase the mobility of students, graduates, professionals and skilled workers while strengthening their efforts to combat irregular migration. France foresees 20,000 Indian students by 2025.
All in all, a productive visit despite the shadow of the Ukraine conflict over Europe.
Kanwal Sibal is former Indian Foreign Secretary. He was India’s Ambassador to Turkey, Egypt, France and Russia. The views expressed in this article are those of the author and do not represent the stand of this publication.