India and the European Union (EU) have agreed to resume discussions about a free trade agreement (FTA), eight years after the talks got stalled. Britain and India will begin formal free trade deal talks later this year, the UK government said, after they agreed an initial package to boost bilateral trade and investment. These two announcements refocus the attention of India towards Europe. It is not just a political initiative; it also is a highly symbolic development that represents an opportunity for both sides. Indo-European? Indo-European languages, a family of languages, spoken in most of Europe and areas of European settlement and in much of Southwest and South Asia, are common to the two partners. India has the largest diaspora population in the world, with 18 million people from the country living outside their homeland in 2020, according to a report by the United Nations. The influence of Britain led to the decision to make English one of the two languages mainly spoken in India. Indians comprise about 1.4 million people in the UK, making them the single largest visible ethnic minority population in the country. Mutual neglect The past decades have been marked by two trends – first, the focus on China by Europe has largely supplanted its interest in India. The EU (including the UK) foreign direct investment stocks in India amounted to €75.8 billion in 2019, which is significant but way below EU foreign investment stocks in China (€198.7 billion) or Brazil (€318.9 billion). The EU is the third largest trading partner of India, while India is the 12th largest trading partner for the EU. Second, India has largely been focussed on the US as well as the UK for the reasons explained above, but also because both countries were more open to migration. The diversity of languages and countries also made FDIs or migration more difficult in the EU. Brexit and the EU The UK, despite having a common language, is a negligible partner for India – both on trade and on FDI. There is, however, a substantial presence of Indian IT companies in the UK. It was convenient for Indian companies to cover Europe through their presence in the UK. Brexit changes the situation and forces all Indian global companies to redefine how they will reach out to the EU’s 450 million population and $14 trillion GDP. This continent is too large to be ignored. This strategy will require a lower dependency on Indian leadership: this is important from a business viewpoint, but it is also critical to recognise that, over the years, the relationship with EU institutions has been neglected by most Indian groups.
