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European Union and India:A Critical Perspective

The European Union has 25 member nations and a single market of 460 million people while India is a major power in south Asia. Bilateral trade and development cooperation between the two have grown appreciably but only peace and greater regional cooperation in south Asia can take this relationship to its full potential.


European Union and India:A Critical Perspective

The European Union has 25 member nations and a single marketof 460 million people while India is a major power in south Asia.Bilateral trade and development cooperation between the two havegrown appreciably but only peace and greater regional cooperationin south Asia can take this relationship to its full potential.


iverse and wide-ranging networks of ties, with the help of rapidly changing technologies, have been constantly reducing the distances between states, societies and continents, under globalisation. Such shrinking of spaces, in their turn, has unleashed the processes of establishing viable linkages through trade, commerce, information as well as political, diplomatic, strategic and military networks between different parts of theworld.Indeed, regional organisations, at one level, epitomise the essence of globalisation on the regional scale. Several such organisations in the continents of Europe and Asia are currently engaged in negotiating with the challenges of globalisation by building viable projects of regional cooperation.

This has also opened up new possibilities of cooperation between regional organisations, on the one hand and between regional organisations and geographically and economically large-sized states like India and China, on the other. Also, the new century is likely to witness growing and complex interdependence between the regional organisations and the states of Europe and Asia. Evidently, any conception of “Eurasia” can hardly be indifferent to the possible ties between the European Union (EU) and India. For, the EU has already absorbed as many as 25 member states and is expanding eastwards while India is a major rising power in Asia, in general, and the dominant power in south Asia, in particular.

Apparent Similarities

More often, the entire experiment of European regional cooperation/integration, with most of its diversities and bewildering complexities, is held in some measure of awe in contemporary international relations. The experiment of regional economic integration in Europe began with the Rome treaty which established the European Economic Community (EEC) in 1957. The EEC, initially, had six member states but as regional cooperation/integration grew, gradually, the EU project that grew out of the EEC has achieved a remarkable success in the realm of promoting regional cooperation, over the past few decades, by grouping as many as 25 states. Indeed, the processes of widening and deepening of regional integration have been simultaneously on the move. Hence the achievements of the EU in “region building” by no means could ever be underestimated. By integrating the populace of almost 460 million people into a single market and developing consciousness that is regional the EU has left an indelible impression in contemporary world politics. It has also stimulated new ways of imagining the geographies of Europe [Hudson and Williams 1999]. The erstwhile ideological divisions which separated the western and eastern parts of Europe no longer hinder the drive towards integration. What is more, the association of Asia-Pacific, African and Caribbean countries with EU markets has allowed the EU to emerge as one of the major centres of world capitalism. Such association does not merely rationalise and promote international division of labour but also provides an avenue to diverse sets of countries, in terms of development, to be a part of the multilateral trading system.

Arguably, India is just a sovereign state and not an international organisation. However, like the EU, India has demonstrated its capabilities to celebrate changing forms of diversities. It could as well be asserted that the socially plural society in India, with subcontinental dimensions, houses a wide range of spiritual, religious, linguistic, regional as also class and caste related diversities among its more than one billion inhabitants. Although independent India began with partition of the sub- continent, the area it commanded and the diversities and social complexities it absorbed have always been mind-boggling for outsiders. Moreover, the roughly 250 million people that constitute the middle classes in India form a vibrant international market.

Even if the mounting of currency such as the euro in Europe on a vast territorial space was a much celebrated affair, India’s rupee is circulated and used across its vast territory and is comparable to the euro zone. Indeed, India has been an old civilisation and a multinational state. Due to its multinational character the talk of national integration through democratic, social and political transformation has inevitably gained currency for the survival of India in its present form. Practically all the social groups perceive a thread of unity weaving the diversity of India into a unique and perhaps indivisible pattern. However, under globalisation uneven development between relatively developed geographical regions of the south and the west, on the one hand, and the regions belonging to the northern belt, on the other have accentuated inequalities between regions and sub-regions. Likewise, apparently even the EU region too has a wide range of economic and social disparities among its various nations/regions from the west, central, eastern and the south-eastern parts. Hence even purely at the level of integration the EU as a regional organisation and India as a multinational state have a lot to gain with reciprocal interactions. Such interactions at multiple levels can firm up Indo-EU ties and the eventual project of Eurasia.

Fundamental Differences

At the same time, it would be imprudent to carry any comparison between the EU and India too far since there are fundamental differences that clearly separate the two entities. First, the former constitutes an organisation of sovereign member states that are involved in promoting economic and political integration of Europe by bringing together the democratic

Economic and Political Weekly April 21, 2007 regimes that are committed to protect human rights. The latter is only a sovereign, independent and democratic state that has absorbed diverse nuances of any plural society. Second, post-colonial India is a single entity with a common foreign and defence policy. In contrast the EU, along with sovereign member states, has been involved in carving out common security and defence policy for the EU, as a whole.

Finally, the entry of the eastern European states into the EU has further added to the complexities in the functioning of the EU involving the nature of development alternatives. For instance, western Europe has had a developed capitalist system whereas the eastern economies are gradually replacing their erstwhile centrally planned economies with the capitalist mode of development. Due to the relatively poor economic performance of the centrally planned economies of eastern Europe the levels of economic and social development in east and west Europe show variations. Besides, the non-territorial and transnational forces unleashed by globalisation related to finance, technology, trade, information, knowledge and crime syndicates as well as terrorism have clearly made their presence all too obvious in the western parts of Europe. There, the youth is more aware of and devoted to EU as an entity. In contrast, the states in east Europe, especially after the fall of the former Soviet Union and Yugoslavia, during the 1990s, are witnessing a resurgence of the forces of nationalism and ethnicity. The EU reflects the tensions associated with the processes of restructuring as well as reconstructing capitalism as developmental alternative where notions of development, planning and the status of the nation state are getting constantly redefined. Nevertheless, the experiment of the EU has been inspiring several regional organisations in the contemporary world politics and economy to usher in an era of viable regional organisations to negotiate with the phase of globalisation, more effectively.

Locating India in Asia

In view of the relatively successful experiment of region building of the EU, several other parts of the world are busy in promoting regionalism as a strategy to negotiate, effectively, with the phase of globalisation. In the globalising world India is also facing the challenge of promoting region building through regional cooperation. It has been at the apex of the regional organisation like the South Asian Association of Regional Cooperation (SAARC). South Asia primarily has been an Indo-centric region. Owing to its land mass, industrial and military development, trained manpower and social and cultural linkages with the neighbouring south Asian states no project of regional cooperation here could easily be conceived without the active participation of India. However, building the projects of regional cooperation is feasible when the states in any region enjoy peaceful ties. Actually, the experiment of region building in Europe could take off because France and Germany resolved their traditional animosities and dug the foundation of the project of regional integration movement in Europe. Both these powers aimed at combating US dominance and a fear of the likely Soviet expansion towards the west.

Unlike the Franco-German rapprochement since the mid-1950s, there is no semblance of harmony among the relations between India and Pakistan that happen to be the major powers of south Asia ever since these two states were born in 1947. In fact, they continue to be antithetical expressions of each other. So far they have fought three major wars and two mini wars. Both have produced their own nuclear arsenals and transformed south Asia into a theatre of conflict. The perpetual hostility between the two countries, especially over the intractable question of the status of Kashmir, has been foiling any constructive bid to bring about regional cooperation in south Asia on a sound footing. What is more, China’s support to Pakistan in building its nuclear weapon programme, the Sino-Pakistan trade and China’s occupation of some area of Kashmir with the help of Pakistan has further compounded the difficulties of regional cooperation in south Asia. The shadow of Sino-Indian rivalry and Sino-Pakistan friendship will have their impact in shaping the project of regional cooperation in south Asia. In spite of their rivalry, Sino-Indian trade has also been on the rise and China has emerged as one of the major trading partners of India during the past few years. To put it simply, irrespective of unresolved political differences, the phase of globalisation can stimulate new configurations of trading partners in Asia and the other parts of the world. India’s efforts to build linkages with regional organisations such as Association of South East Asian Nations (ASEAN), Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), African Union (AU) and South American regional trade agreement, namely, MERCOSUR are cases in point. Especially, while enhancing the prospects of cooperation in Eurasia India’s role in promoting new configurations of trading partnerships is going to be crucial, in the years ahead, due to its geographical location.

Although Nehru described India as a hub of Asia, perhaps geographical location and the land expanse coupled with its growing economic prowess make contemporary China the hub of Asia. Even India’s stature as a major power, in the context of globalisation, will be determined by its multiplerange collaborative ties with China in the decades ahead. Besides, India has been virtually surrounded by states with predominant Muslim populations on three sides. Muslims also constitute the most dominant religious minority group in India. Obviously, while relating its foreign policy to different parts of Asia India’s policymakers have had to be sensitive to the sensibilities of its Muslim population in India.

Furthermore, as Pannikar had once remarked, India actually is a castle surrounded by the seas and capped by the Himalayas. Its peninsular position compels it to be a maritime power as well as a continental power. Especially, in the context of globalisation, India has to promote its seaborne trade to ensure its economic growth. During the past decade India’s economy has grown consistently at the annual average rate of almost 6 per cent and the growth is likely to be accelerated in the years ahead. While managing its economy efficiently, India will have to face the constant challenge of meeting its energy requirements. Evidently, India will have to link itself to energy heartlands of west Asia such as Iraq, Iran, and Saudi Arabia as also countries in central Asia that possess substantial deposits of natural gas. Like India the European countries are also trying to link their economies with the energy heartlands of Asia.

One of the important similarities between most of the EU countries and India has been the fact that both these regions are dependent on the supply of oil from west Asian countries. Especially after the first oil shock of 1973 and the consequent formation of the Organisation of the Petroleum Exporting Countries (OPEC) the economies of India as well as most of the EU countries have been hostage to steady and uninterrupted supply of oil from west Asia. Obviously, coming together to resolve rising energy demands through evolving mechanisms of cooperation would spring up as a major challenge in the Indo-EU ties. The EU countries and even India do have the technological

Economic and Political Weekly April 21, 2007

resources to exploit the natural resources like oil. Of course, unlike India, the US and European oil companies are much better entrenched in the energy heartlands. However, serving the energy requirements can bind the regions of Eurasia. The politics related to sharing and exploiting of oil and natural gas has and is going to involve all the major oil companies and the states in the days ahead. Moreover, owing to its rapid economic growth India’s energy demands are going to rise sharply. This will pose challenges for the state in India as well as the Oil and Natural Gas Corporation (ONGC) of India to work out policies to ensure India’s energy security. Such a policy would reflect interdependence between India, on the one hand, and some of the major oil companies, states of EU and west Asia, on the other. They would require deft handling because in spite of efforts to build a pipeline between Iran and India, via Pakistan, the project still has not taken off. In addition to oil and gas the EU-India cooperation in the realm of energy is also likely to be promoted in other forms of generating power such as coal, hydro, solar and nuclear.

Paradoxically, the countries from the energy heartland today and its immediate neighbours like Afghanistan and Pakistan have been plagued by the proliferation of different terrorist outfits that have been using Islam as a political weapon to promote their demands. Besides, there are several other kinds of terrorist outfits that are impeding the development processes and cooperation across the Eurasia. Under the circumstances, the project of Eurasia as well as the likely trajectories of EU-India ties will be constrained to address the issues related to development cooperation as well as security simultaneously.

EU-India DevelopmentCooperation

The EU-India strategic partnership has been growing over the years. The EU has been extending its trade and investment ties with China, Japan and India. In the process, the EU has emerged as India’s most significant trading partner. The EU imports from India came to 18.9 bn euros in 2005 covering mainly textiles and clothing and agricultural products as well as chemicals. In fact the textile exports of India towards the EU after the removal of textile quotas have grown to 5.2 bn euros in 2005 as compared to 4.4 euros in 2004. While EU exports to India in 2005 amounted to 21.1 bn euros, including machinery, chemical products, gems and jewellery.

Since 2001 the bilateral trade between the two has grown by 11 per cent on an average [European Commission 2006]. The trade of services between the two has also grown substantially. There is also reciprocity of flows of foreign direct investments (FDI) between the EU and India. The EU was main destination of companies from India which invested one out of four dollars in the EU. Some of the prominent Indian companies such as Infosys, Tata Consultancy Services, HCL Technologies, Wipro and Birla as well as a range of firms including Thermax, Tata Teleservices, Compact Disk India, Mastek and Bank of India by now have presence in the EU. The EU invested 1.1 bn euros in India in 2004 which was 1.4 per cent of total EU outflows (ibid). Obviously, the widening membership of the EU also has been among the major causes for the growth of such trade. However, India is still not among the very significant trading partners for the EU. The EU imports only 1.6 per cent of the total goods and .8 per cent services from India (ibid).

Furthermore, there are burgeoning prospects of development cooperation between India and the EU in several other fields. India has already given its commitment to participate in EU’s multibillion-dollar Galileo-satellite project. The project will come on line in 2008 as an alternative to the US Global Positioning System. China has put up about 230 million euros to join it and India is likely to give 300 million euros. Besides, India has an ever growing information communication technology (ICT) sector since the 1990s. Its outsourcing capacity has already attracted the countries like the US. The losses of jobs due to outsourcing have placed the economies of the advanced countries in some measure of discomfort. Likewise the budding, skilled as well as semi-skilled personnel from the ICT sector of India can look upon the EU as a potential source and destination for jobs. Moreover, the ageing and even declining rate of working population in European countries can also provide employment avenues for Indians. For, within the next decade the percentage of population of the youth in India, compared to EU countries, is likely to increase dramatically. India would get the advantage of capitalising on this demographic dividend. The EU-India development cooperation could be promoted even further through investments in infrastructure. India’s policy to develop all-round infrastructures of roads, rail links, ports, air ports and power sector provide potential avenues to firm up Indo-EU economic and technological ties.

Besides, key international agencies like the World Trade Organisation (WTO) have already become a medium to ameliorate trade cooperation between the EU and India where problems related to goods, general agreement in trade in services, agriculture, and textiles, new trade-related areas in the intellectual property rights and trade-related investment measures are being thrashed out. The policy of offering substantial subsidies to farmers in the EU and other developed countries, at the moment, has prompted India and other developing countries to fight within the forums like the WTO for the farmers of developing countries that are unable to compete in the world market. Moreover, any form of trade liberalisation involves lowering and eventual abolition of trade barriers. However, such long term ends could be served better if India is able to activate south Asian cooperation. In a word, the prospects of EU-India cooperation would appear brighter only if India is able to contribute to region building in south Asia.

In spite of the emergence of SAARC since the 1980s, the regional cooperation in south Asia has moved ahead at a very slow pace. The trade between the SAARC countries is still insignificant because their economies are competitive and not complementary. The major trading partners of these countries are EU, the countries from Asia Pacific and the US. The twelfth summit of SAARC held at Islamabad has worked out a longer term project of establishing South Asian Free Trade Area (SAFTA) in 2004.1 Considering the asymmetrical power relations between India and fellow SAARC countries, India will be constrained to take the lead in forging the trade and development related ties. In this context, the Gujral doctrine that rested on promoting non-reciprocity of relations between India and relatively less developed and weaker states like the Bangladesh, Nepal, Sri Lanka and Bhutan has acquired added significance. India already has been stimulating trade with its weaker partners in south Asia by lowering tariff barriers for their goods and exercising positive discrimination in economic ties to integrate the regional trade. Similarly, the sharing of Ganga water through a 30-year agreement between India and Bangladesh in 1996 or the prospects of Mahakali treaty to share river water with Nepal are enhancing the south Asian cooperation in the domain of agriculture. The bus services between India and Pakistan have already heralded the process of transport cooperation. Peaceful ties within the region would eventually promote development cooperation in

Economic and Political Weekly April 21, 2007 crucial sectors such as energy. For instance, hydro power in Nepal and natural gas resources of Bangladesh have yet to be fully exploited in the pursuit of the development of the region. Besides, transport, agriculture, ICT, rural development, healthcare services have also sprung up as potential areas of cooperation. In spite of some efforts to promote regional cooperation in south Asia the range and depth of such cooperation still leaves much to be desired. In order to promote better economic cooperation it is essential to harmonise macroeconomic policies, integrate labour markets along with commodity and capital markets and achieve social integration. In the long run, if the project of SAFTA takes off under SAARC a possibility of exploring EU-SAARC cooperation could also be set on the rails. It still appears like a distant dream. For, in contrast to the EU experience of building a movement for regional cooperation, south Asia is still bogged down with securityrelated problems.

Security-Related Problemsand Perceptions

The security-related problems in south Asia, in general, and India, in particular, have had twofold dimensions. First, all these countries after attaining sovereign statehood are struggling to achieve national integration. That is why deprived regions or communities in all these countries still have a sense of discomfort with the existing borders of these countries. Like several other regions of the developing world the borders of the states and nations do not correspond with each other in south Asia as well. Even developed, capitalist countries like the UK, Canada and Spain have had to face secessionist movements while negotiating with this problem. Such secessionist groups for the sake of either autonomy or even independence have been striving to carve out spaces for themselves in different parts of the world. In the context of south Asia, the break up of Pakistan and the consequent emergence of Bangladesh in 1971 was an extreme example in the latter category. Second, India has also witnessed the advent of secessionist movements with varying degrees of intensity and power. The secessionist movement launched by the Sikh extremists in the 1980s has subsided, but similar movements in the states of Kashmir, Assam and the north-east have inevitably unsettled the security environment in India since the past two decades. Such movements have also facilitated the intervention of the external powers such as China, Myanmar, Pakistan, Bangladesh and Bhutan in India’s internal affairs. To keep the country together the legislative bodies and coercive apparatus of the state in India have had to use harsher measures, including Prevention of Terrorism Act (POTA) in areas prone to insurgency or terrorist activities.

In view of the role of the state in India, however, the human rights organisations as well as different states in the EU have been unsparing in condemning human rights violation in India in the areas such as Kashmir and even Manipur. Plausibly, the EU countries need to understand the state-society ties in socially plural societies like India more imaginatively. The EU insistence on protecting human rights in the context of democratic framework is quite legitimate. However, to establish such a framework requires a longer time span where democratic institutions get built and prove sustainable, in the long run. Till such institutions are in place the ties between the state and civil society are in a state of flux. The fact that among the third world countries India still functions as a vibrant parliamentary democracy can seldom be underestimated while forging EU-India ties.

However, the EU countries’ encounter with terrorism has become frequent only after 9/11. Unlike the EU countries, the entire south Asian region has already become a theatre of conflict. Practically all the countries that surround India have problems with the former due to lack of mutually acceptable international borders, sharing of resources in including river waters and the flow of migrants, terrorists and refugees across the borders. In substance, if the activities of the terrorist outfits are mapped out within south Asia, it could be safely asserted that the burgeoning of such outfits due to intractable intra and interstate conflicts is halting the process of regional cooperation and development.

In view of the capabilities of the terrorist organisations to operate on the global scale, fighting terror in all its forms can form one of the major objectives of EU-India ties ahead. So far, both the parties have shown intent of cooperation and launched ritual condemnations of terrorist outfits and their activities. The EU-India joint declarations on terrorism of 2001 and 2004 respectively are cases in point. Both the parties have similar views on the nexus between terrorism and organised crime, including narco-trafficking, money laundering, nuclear proliferations and weapons of mass destructions. The EU also has expressed support to India’s draft, under consideration at the United Nations, on Comprehensive Convention on International Terrorism. It has also legally banned terrorist organisations such as the LTTE of Sri Lanka. Actually, seeking a legal solution to the political problem created by the Tamil ethno-nationalist movement may not help in resolving the protracted insurgency in Sri Lanka [Raman 2006]. To contain terrorism, apart from legal or military means, more persuasive, long term and humane methods are equally necessary. Perhaps, people-to-people contacts through groups that promote peace activism can unleash spaces for carrying out peaceful negotiations between the contending parties. Nevertheless, the EU countries can gain from India’s long experience in handling terrorist outfits. The India- EU Joint Working Group on Anti-Terrorism eventually has to operate within the Joint Working Group on Security Cooperation.


The possible project of Eurasia can be translated into reality as major powers and forces establish viable linkages among each other in multiple areas, under globalisation. Obviously, EU-India ties in multiple areas of development cooperation would bind vast territorial spaces, their respective immediate neighbouring regions as well as intermediary regions into cooperative ventures. Such cooperative ventures could progress well only with the formation of multilateral counterterrorist coalitions.




[This paper was initially presented at the University of Tampere, Finland in the international seminar on “Perspectives on Eurasia” in September 2006. I am grateful to Jyrki Kakonen, Ranabir Samadhar and Sanjay Chaturvedi for their comments.]

1 See A R Kemal, Regional Cooperation in South Asia, SAFMA Regional Conference, August 20-21, 2004, Dhaka, conference/Regional_Cooperation/safta


European Commission External Trade-Press

Information Service, October 13, 2006, Hudson, Ray and M Williams (1999): Divided

Europe Society and Territory, Sage, London. Raman, B (2006): ‘Implications of EU Ban on

LTTE’, paper No 63, International Terrorism

Monitor, South Asia Analysis Group, paper

No 1817, May 28, at


Economic and Political Weekly April 21, 2007

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