India-EU Relations: New Beginning to Impact Entire South Asia
The India-European Union (EU) summit held on 27 January has not only given new direction to bilateral relations but is also expected to have far-reaching effects on South Asia's diplomacy and economic structure.
The proposed India-EU Free Trade Agreement (FTA) is likely to shift part of the textile exports from Bangladesh and Pakistan to India in the European market. Institutionalizing defense and security cooperation may also deliver a major setback to Pakistan's traditional lobbying efforts against India in Europe.
Pakistan's strategy to create discomfort for India on issues like Kashmir and Khalistan through local politicians or NGOs is expected to become much less effective. The cooperation between India and the EU against cross-border terrorism is likely to outweigh Pakistan's plans.
The announcement of the FTA has already created concerns in Pakistan and Bangladesh. Former Pakistan Commerce Minister Gohar Ejaz stated that if precautionary measures are not taken, the deal could threaten around one million jobs in his country.
Currently, the European Union imposes an average 12-16% import duty on most apparel and garment products imported from India, while Bangladesh and Pakistan enjoy near-duty-free access under schemes like "Everything But Arms" (EBA) and "GSP Plus". After the proposed FTA, India will gain almost duty-free access to the EU market, making Indian products more competitive.
According to data, India currently exports around $7 billion worth of textiles and apparel to the EU. In comparison, Bangladesh exports over $16 billion and Pakistan around $6 billion. Despite lower exports, India’s textile sector is fully self-reliant and, due to better supply chains and production capacity, is well-positioned to benefit from the FTA.
Pakistan has long lobbied against India in European countries using diplomatic channels, diaspora communities, NGOs, media, and social media. Reports have also emerged of funding in Italy, Germany, and Poland supporting Khalistan. In 2019, after India revoked Article 370 in Kashmir, Pakistan tried to raise this issue in the European Parliament. India is now in a stronger position to present these issues to the EU.