Can India capitalize on China-EU frictions?
Published: Apr 09, 2021 07:28 PM
Illustration: Tang Tengfei/GT

Illustration: Tang Tengfei/GT

According to German newspaper Handelsblatt, Europe is actively seeking new partners in Asia amid growing tensions between China and the West, and the West is placing India in central position of its Asia policy.

The diplomatic charm offensives between Europe and India seem to indicate this assertion. French Foreign Minister Jean Yves Le Drian will begin his two-day visit to India next week, and UK Prime Minister Boris Johnson is expected to visit India in late April as part of his government's tilt toward the Indo-Pacific. Indian Prime Minister Narendra Modi is also scheduled to embark on his European tour - he will be in Portugal for the India-EU Summit in early May to advance bilateral trade talks.

Even at a time when Europe and China are at odds over issues such as human rights and are experiencing a period of uncertainty, the bitter reality for Europe is that it can hardly find an alternative market in Asia to replace China. India's economic volume is not as big as that of China. Despite its large population, India's purchasing power, GDP per capita and scale of market are all far below those of China.

In addition, India's level of basic infrastructure including network and roads and the ability to provide electricity supply for factories, requiring large-scale investment, do not match China's. Europeans would find themselves disappointed at the services India's public facilities provide.

Meanwhile, the low efficiency of India's administrative bureaucracy is well known. The performance of Indian officials is not GDP-driven. Therefore, India's business environment is far from friendly and is inconvenient for foreign investors. Europeans would have to adapt to it when dealing with local governments and India's legal environment.

Moreover, there are limited complementary economic areas between India and Europe, hence there is no clear system of industrial division that serves as lubricant to boost bilateral economic cooperation.

Amid tensions between China and the US-led West, the rhetoric that Europe is looking to India to replace China can be seen as an attempt to impose diplomatic and opinion pressure on China. As the feud between China and Europe continues, with China's sanctions on European officials in response to the EU's sanctions on Chinese officials, Europe hopes to add pressure on China by drawing closer to India. In addition, Europe is playing a coordinating role to the US' Indo-Pacific Strategy by attaching importance to India.

But Europe did not place India at a high position in its agendas. China and the EU concluded their negotiations about their bilateral investment treaty at the end of 2020. But the bloc and India have made no visible progress over their free trade agreement (FTA) since 2007 despite the two sides having often expressed an interest in closer trade relations.

The EU has put forward a norm of new-generation FTAs, which includes certain high-level criterion in terms of environment protection and human rights. But for India, these standards are not that easy to reach. From this perspective, even though there might be some frictions between China and the EU, there is little room for India to speed up its FTA negotiation with the bloc due to such structural contradictions.

Due to their currently bumpy relations with China, the EU and India may get closer to each other. But how far their intimacy will go depends on what China-EU relations, as well as US pressure on the EU, will be like. Faced with US pressure, both Europe and India have to do, or at least say, something - such as keeping a distance with China while pressuring the country at the same time.

Enticement from the US and the EU are hard to resist for India. It is aware of its role as a chess piece of the two to contain China. What New Delhi can do is reap gains from the China-West game while refraining from tilting too much toward any one side. 

The author is executive deputy director of the Center for European Union Studies, Shanghai International Studies University. opinion@globaltimes.com.cn
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