Brussels denial: Modi upbeat on trans-Atlantic tour
by Ashok B Sharma on 02 Apr 2015 0 Comment

Brussels may not be willing to oblige India by inviting Prime Minister Narendra Modi as it is perturbed over the delay in rendering justice to two Italian marines who allegedly shot down two Indian fishermen in the country’s waters. But France and Germany have taken a different view and are set to welcome the Indian Prime Minister.


Brussels’ denial, however, does not upset Modi’s calculus. The India-EU Broad-based Trade and Investment Agreement (BTIA) is still under negotiation, to settle contentious issues relating to intellectual property rights among others. According to several trade analysts, watering down of Indian intellectual property regime and data exclusivity at the behest of the European Union is likely to spell doom for Indian pharma and agro-chemical industry in particular. The terms being insisted upon by the European Union are inimical to India’s dairy sector. EU wants free access to their subsidized skimmed milk powder and Feta cheese.


At the World Trade Organisation (WTO), India and other developing countries have consistently complained about highly subsidized European agriculture and protectionist barriers like high tariff regime, non-tariff barriers and politically motivated sanitary and phyto-sanitary measures (SPS). These European initiatives have placed farmers in the Third World countries at a serious disadvantage, denying them a level playing field in multilateral trade. While keeping their subsidy regime and protectionist measures intact, the European Union wants easy access to their farm products and also industrial products like scrap cars in the Indian market. It also wants elimination of export tax on raw materials exported to Europe.


The European Union has become more protectionist in trade following the global recession that followed the liquidation of Lehman Brothers in US in 2008. Again the blow of the sovereign debt crisis made Europe difficult to recover and return to its pre-recession growth rate. EU’s involvement in the Ukraine crisis further complicated the problem. EU had been a major destination for Indian exports which have experienced considerable shrinkage following recession in Europe. In such a situation it is unlikely that EU would make any major concessions to accommodate Indian exports. Rather it would be seeking more markets for its goods.


However, investment in enterprises is a different ball game altogether. India needs more inflow of foreign direct investments (FDIs) to facilitate growth. But unfortunately both trade and investment are clubbed together in BTIA which has made it difficult to reach a final conclusion. Yet there is scope for striking bilateral trade and investment agreements with several European countries which can be a better option. Hence it would be better not to harp too much on deal like BTIA with EU, but rather go ahead with inking mutually beneficial agreements with major European economies like France, Germany, and UK.


Though in aggregate terms the countries of the European Union (EU-15) are growing slowly at 1.2 per cent, Germany, UK and France have the potential to grow faster. Prime Minister Modi is scheduled to visit France and Germany in the second and third week of April and is expected to ink several bilateral agreements and seek investments from these countries. In the first leg of his visit he is scheduled to meet President Francois Hollande. The purchase of Dassault Aviation’s $12 billion Rafale fighter planes, Multi-crore Maitri surface-to-air missile system project - SR-SAM project are likely to figure in the talks along with proposals for strengthening defence cooperation. The two sides are expected to take up Jaitapur nuclear power project where the two countries are planning installation of six nuclear power plants in a phased manner.


On 6 December 2010, an agreement was signed for the construction of the first set of two third-generation European Pressurized Reactors and the supply of nuclear fuel for 25 years, in the presence of the then French president Nicolas Sarkozy and then Indian prime minister  Manmohan Singh. But in this year’s Defence Budget there is very small space for a big ticket purchases in the pipeline like $12 billion for medium multirole fighter jets, $1.2 billion for six Airbus A330 tankers, $1.1 billion for 22 Boeing Apache attack helicopters, $1 billion for 197 light utility helicopters, $833 million for 15 Boeing Chinook heavy lift helicopters, $600 million for light howitzer guns from BAE Systems, $200 million for 98 Black Shark torpedoes from WASS, $350 million for 1,418 Israeli-made thermal imaging sights for T-72 tanks, $250 million for 262 Barak missiles from Israel Aerospace Industries.


However, with a view to curtail defence imports, Prime Minister Modi is insisting upon co-designing, co-production and co-development of defence equipment and platforms in the country under the Make in India initiative. This is the time for him to discuss and finalise such initiatives with President Hollande. Also Prime Minister Modi may take the advantage to discuss cooperation in renewable energy and combating climate change ahead of the Paris talks.


As India is a partner country to Hannover Messe 2015, Modi’s visit to Germany is likely to centre round urging for more investment flows into the country. Apart from inaugurating the Hannover Messe along with Chancellor Angela Merkel, he will have bilateral discussions with Chancellor Merkel and other senior leaders. After the joint ‘Walk Through’ of selected Indian stalls in Hannover Messe, both leaders are scheduled to attend the inaugural session of the Indo-German Business Summit. More than 300 Indian companies and 100 CEOs of Indian companies are participating in Hannover Messe. About 12 state governments, including Maharashtra, Andhra Pradesh, Punjab, Gujarat, Rajasthan and UP will exhibit their profiles in the State Pavilion adjacent to India Pavilion.


Germany is a leader in renewable energy and Modi expects to mobilise investments for not only renewable energy, but also for electronics and electricals, smart cities, Skill India, heavy industries and motion drive and automation and Digital India. He is also expected to appeal to the Indian diaspora in France and Germany.


Modi’s visit will not only be limited to these two European countries, but it will be Trans-Atlantic, covering Canada as well. In his scheduled visit in mid-April, he is expected to discuss with Prime Minister Stephen Harper and interact with the Indian community. It was Prime Minister Harper who cleared the deal for sale of Canadian uranium to India in 2012 for use in nuclear power plants. Apart from trade and investment issues, talks are likely to be on combating climate change and cooperation in renewable energy.


Thus Brussels’ denial to host Modi is unlikely to derail Indian strategy if bilateral agreements are carefully inked with France, Germany and Canada. Indian officials are quite confident of the success of the Prime Minister’s coming visit to France, Germany and Canada.  

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