Owing to an evolving focus on trade, trusted technology and security, India-Europe collaboration, strategic relationship and bilateral economic cooperation is constantly being strengthened. The same has been endorsed in 2020 as part of the ‘EU-India Strategic Partnership: Roadmap to 2025’ . Europe’s leadership in sustainability, research and development (R&D) and innovation coupled with India’s entrepreneurial spirit and large and fastest-growing consumer market make them natural partners.

The presence of European industries, brands and business organisations in the Indian market can be traced back to more than a century. At the same time, a long future engagement is clearly visible from the ongoing collaborations and cooperations, which is leading to sustainable business growth. In order to disrupt status quo, foster innovation and further multi-stakeholder engagements in the Europe-India Business Corridor, digital inclusion must be a central component. This requires a focused and coherent approach that needs to be implemented for exchange of best practices. This will enable the creation of a smooth ICT ecosystem development.

Under the leadership of both the EU and Indian governments, a flagship programme called ‘The Digital Single Market strategy’ in the EU and "Digital India" in India has been agreed to create the framework and related activities under digital economy vision. This holistic programme imbibes the common goal of both democracies to enable digitisation of industries and societies which will lead towards the job creation, skilled manpower and next level technologies in liveable cities.

The aforementioned focus areas also highlight ‘digitalisation’ as the underlying crucial component. The need for a well-laid approach to capacity building, resilience and technological adaptation has been further highlighted during the pandemic. This creates an urgent need to focus on strategic aspects of emerging technologies and building trusted partnerships through demand-driven collaborations. Industries, associated ecosystems as well as supply chains need to revamp their business models to enable speedy digitalisation to achieve long-term sustainability.

The Landscape in India

Banks' focus on internet and phone banking applications have paved the way for other domains to digitalise as well. India has made rapid strides in this regard with the launch of ADHAAR and then linking it with several financial functionalities such as direct transfers, tax filing, bank accounts, key financial transactions etc. Digital payments, enabled through a low-cost infrastructure facilitated by BHIM UPI, and its widespread adoption is a globally inspiring case study. In fact, from a traditionally cash-driven economy, the share of UPI has increased to 63 per cent in a period spanning less than a decade which facilitated 6.28 billion transactions worth Rs 10.63 trillion in July 2022.

Along with this, healthcare, medical instruments, automotive and information and communications technology (ICT) are some of the prominent domains in various stages of adopting digitalisation. Digitalisation is also a key focus area in the logistics sector and will be key to bringing down the cost of logistics to single digits from over 14 per cent of GDP currently. The recently launched National Logistics Policy places significant emphasis on the same where the Unified Logistics Interface Platform (ULIP) will bring all the digital services related to the transportation sector on a single portal.

All of this is driven by India’s macro factors which are enabling such growth. India is one of the fastest emerging markets and developing economies with the fifth-largest GDP in the world, amounting to $3.17 trillion (USD current as of 2021). It is estimated that there are 692 million internet users in India, which is slated to increase to 900 million by 2025 (as per the report by The Internet and Mobile Association of India). This is coupled with the significant reduction of hardware costs for common users and user-friendly government policies.

EU and India: Strategic and Policy Alignment

The European Union (EU) and India hold regular bilateral meetings, covering trade barriers as well as economic and regulatory matters. These include the EU-India Sub-Commission on Trade and its specialised Joint Working Groups, including Sanitary and Phytosanitary Measures (SPS)/Technical Barriers to Trade (TBT); Agriculture and Marine Products; ICT; Pharmaceuticals and Biotechnology; and Medical Devices.

Building on the same, the ‘EU-India Connectivity Partnership ’ identifies four key pillars as digital, energy, transportation and people-to-people connectivity. It highlights the strong role both regions can play in providing stakeholders with a conducive platform to consolidate and share information on sustainable investment project opportunities.

With the revived Free Trade Agreement (FTA) negotiations between the EU and India (continued from 2007 which was ceased after 16 rounds) accompanied with the current geopolitical scenario of the Russia-Ukraine war and COVID-19, new dynamics have come into the picture.

Digital technologies are at the core of these discussions and are integrated as a mandatory factor in the current economy to drive innovation, jobs, and growth. Investments are higher in creating digital infrastructure and deep-tech focused research to create resilient economies. Furthermore, management of finance, utilities, public services, health and retail services; swift operational and working model; and e-commerce, internet and cloud-based infrastructure have contributed immensely towards the same.

A source cited by the European Commission highlighted that there is an urgent need of investments in technologies such as Artificial Intelligence (AI), Cloud, Internet of Things (IoT), Edge Computing, etc. The same goes for other economies as the severity of the situation of Russia’s invasion of Ukraine heightens. The invasion has had significant effects on commodity markets, supply chains, inflation, and financial conditions which has, in turn, resulted in the slowdown of global growth. This is suggestive of a wide-ranging policy, and macroeconomic frameworks along with the integration of digital technology for revival.

Way Forward

Deducing from all the facts and figures available, it has been established that India and the EU are two of the world's largest economies which have shared synergies and are offering significant trade and investment opportunities. The EU, with its 27 Member States, is India's largest trading partner in goods and services, with bilateral trade (goods & services) of over €100 billion. Close to 4,500 EU companies in India employ 6 million people (directly and indirectly) . The current value chain, from inventions to the deployment of solutions, requires adaptation and proof of concepts for the government or the private sector. This is crucial to mitigate the risk of deployment of such technologies at a larger scale. Hence, a holistic ecosystem is required to support the same.

Given that Europe and India are two leading democracies in the world dedicated to defending and advancing human rights; a rules-based international order; effective multilateralism; sustainable development; and free commerce, they make ideal partners. Both sides need to work in collaboration to create strong allied forces and bloom in economies. Indian and European industries and academia can seize this chance to further expand their market penetration by meeting the strict quality criteria of both geographies’ customers.

For the same, Indian businesses need to urgently focus on key elements of sustainability across its supply; standardisation; value addition; packaging; IP protection and much more. Partnerships with European businesses can be a crucial enabler in achieving the same. Further, it is also necessary to create harmony between urban and rural India, hence the adoption of scale-up Labs to create a mutual platform towards establishing a connection between urban and rural lifestyles is crucial. The essential blocks of this framework can create a circular economy, digital transformation, and indigenous self-adequacy while facilitating sustainable living.

To realise the above-mentioned potential and vision of bilateral collaboration, a few challenges need to be taken care of by both Indian and Europe sides. A lot of initiatives under major frameworks have been established. In order to implement these, there are a few critical issues and challenges on both sides, which need to be embedded in projects or models.

This article has been adapted from Ankita’s opinions on ‘Building the Future of EU-India Strategic Partnership between Trade, Technology, Security and China’