'Room for growth'

Delegates of the European Union are in New Delhi for the EU-India summit. Aside from sanctions on Iran, a number of other topics are on the agenda of this year’s meeting in the Indian capital: Pakistan and Afghanistan, the energy sector and, of course, the EU-Indian free trade agreement, which has been in making for many years. Negotiations over the trade agreement slowed down, despite the benefits it would have for both sides. The European Union is looking to gain access to the Indian market - one that is very attractive considering its population on 1.2 billion people, a large portion of whom are young. But India fears that many of its sectors and companies will not be able to compete with the Europeans.

The EU is India's largest trading partner. In 2010, trade volume amounted to 86 billion euors - around 15 percent of India’s total foreign trade. For the EU, trade with India makes up only 2.4 percent of its trading volume. José Manuel Barroso, President of the European Commission, made a desperate plea during the last EU-India summit in Brussels in 2010, saying: "there is a lot of room for growth."

At the summit he said a free trade agreement would release the potential which lies mostly dormant in both the European and Indian economies. "Let's sign the agreement in 2011." Despite all efforts, an agreement does not appear likely this time around, either.

Differences of opinion

European countries and India have held diplomatic ties for around 50 years. For much of that time, India, now seen as an up-and-coming super power, was viewed as a poor developing nation with not much of a future. Though they shared some basic values, such as democracy, freedom and human rights, the EU did not take the now-nuclear power India as a serious political partner until around two decades ago, when it recognized its strategic position in one of the world’s most turbulent regions.

India has hardly felt the effects of the global economic and financial crises. Praveen Jha of the Jawaharlal Nehru University in New Delhi believes that is why the South Asian country is in a new position of power. "If we only look at today, then we see that the EU is facing a number of challenges and that India, which in the past has always been far behind the EU in all areas, is now very strong." Jha expects this trend will keep up for a while, given India's annual growth rates of around eight percent for years and the fact that the structure of the 27-member EU is becoming very weak.

Rivalry with China

But India's goals are quite ambitious; China, its old rival, is a further along. The EU and China entered into a strategic partnership years before one was created between the European Union and India. China is also the EU's second largest trading partner, just behind the US.

Praveen Jha emphasizes that India, despite all of its efforts, will not be at China's level any time soon. "Compared to China’s growth and the speed of that growth, India is far behind."

Contrary to China, India has been able to gain sympathy because it is a democratic country, says Jha. But the recent scandals, in which high-ranking politicians were involved, have had an impact on India's reputation. Prime Minister Manmohan Singh’s former telecom minister A. Raja is currently in jail on charges of corruption and fraud. Graft and mismanagement over the Commonwealth Games of 2010 cost the government enormous sums of money. Jha says India can only blame itself for its bad image. "All of these scandals have cost India its charisma. It has always attempted to present itself as an attractive country for foreign investors." Though there have also been scandals time and again in China, "what has recently happened in India is unprecedented in the history of the country. Now China is greatly benefitting from that," said Jha.

Herman van Rompuy, President of the European Council, José Manuel Barroso, President of the European Commission, and EU Trade Commissioner Karel de Gucht are meeting for talks in New Delhi on February 10. Four days later, the EU-China summit will take place in Beijing.

Author: Priya Esselborn/sb
Editor: Shamil Shams