East Meets West March05


Europe and India have been trading partners for centuries. Historically, Indian connections were crucial for European trade with China. Linguistically, culturally and socially the Europeans are more at ease in India. India is the world’s largest democratic nation and the EU/USA political systems share the same principles of parliamentary democracy. India has 40 languages, offers freedom of worship to all major religions of the world, a free press, an independent judiciary and a non-political army. With 135m Muslims as its largest minority, India continues to be a stable secular state although recent religious violence in Gujarat did tarnish India’s international reputation.


In 1962, India was one of the first countries to establish its embassy in Brussels to deal directly with the European Community. Unfortunately, India did not benefit from this early association as Indian economic policy did not encourage foreign investment and ownership in numerous key sectors. Indian politicians were obsessed with developing an internal market based on local manufacture and import substitution. Food self-sufficiency was a priority as was rural employment. India did succeed in taking a political lead of the non-aligned nations to collaborate effectively with the EU in the UN, IMF and WTO. India has been a strategic partner of the EU in developing regional trade links in Asia through ASEAN and it has helped EU Member States in promoting goodwill and diplomacy in the Middle East.


Only 1.3% of EU exports go to India whilst 25% of India’s exports are destined for the EU. Mutual trade between the EU and India can be substantially higher if there is a fair trade agreement that reduces barriers in mutual trade of agricultural products, pharmaceuticals, chemicals, textiles, leather and semi-finished industrial goods.


India can realise the full value of its human resource potential if it privatises its state owned enterprises and dismantles its extensive network of bureaucracy. Indian bureaucracy cripples indigenous as well as foreign enterprises and diminishes its relative advantage to China. Its bureaucracy devalues labour, wastes financial resources, breeds corruption and inflates costs of goods and services. India must privatise state enterprises, transform its bureaucracy and adopt electronic means to communicate with the public and offer financial incentives to the private sector to adopt the latest information technology. It must modernise its infrastructure and invite foreign investors to own and manage its air, rail and road networks. It must encourage telecommunication companies to own and manage assets across all its states. These reforms would create a huge demand for labour, goods and services. They would enable India’s huge pool of human resource to realise their full potential.


In 1992, India introduced economic reforms that led to GDP growth of 6.5% per annum for the period 1992-2001. Further reforms introduced by the Vajpayee Government in 1999 substantially improved India’s trade with the EU. India’s new Congress-led government has opened its economy to direct foreign investment in local manufacture of a wide range of products and EU manufacturers need to explore the possibility of jointly owned projects in telecommunication, power generation, construction and pharmaceuticals. The current five-year plan for 2002-2007 is based on annual economic growth at an average of 8%. A large number of major British companies have set up cost efficient call centres in India to provide a wide range of services.


The Indian Chamber of Industry & Commerce, like the American Chamber of Commerce, should establish a link with the European Parliament and start a regular dialogue in Brussels to offer an opportunity for Indian businessmen to meet European Parliamentarians, European industrialists and European Commission officials to identify areas of possible co-operation and joint partnerships. Such dialogue will enhance substantially mutual trade between the EU and India.


India needs to lobby the EU for establishing a Joint parliamentary Assembly with the European Parliament. This will enable direct exchange between parliamentarians in both countries to explore issues relating to trade, industry, research and poverty eradication.