Brussels in winter- Europe is India's largest source of foreign direct investment

K.P. Nayar

January 14 , 2015

New Delhi's civic body was on overdrive to complete what needed to be done to spruce up the city for Barack Obama before Monday's announcement of the local elections. The worry was that some "anarchist" in the Aam Aadmi Party would approach the Election Commission complaining that one activity or other in Obama's name was in violation of the model code of conduct. Think tanks are on super-drive on behalf of the president of the United States of America, especially those institutions headquartered in the US, many of which now have branches in this country. Only at Rashtrapati Bhavan, where Obama's actual host lives and works, it is business as usual, which is how it should be. "Where was all the fuss," one of India's finest diplomats asked on Sunday, "when Vladimir Putin was coming?" He then proceeded to recount to a small group at a garden party how ties with Russia still carry more substance in absolute terms for India than any other bilateral relationship.

It is time, therefore, to do a reality check on another of India's external relations, a hugely understated engagement, which, any analysis without frills will show as potentially the most important friendship, without an iota of doubt. It may come as a surprise to some that this is the relationship between India and the European Union, collectively made up of 28 countries. Amidst all the fancy talk about a target of $500 billion in trade between India and the US, it is often ignored that this country's biggest trading partner is neither the US nor China, but Europe as a single market through the mechanism of the EU. Europe is well ahead of anyone else as the largest destination for India's exports as well.

Unlike in other major markets, Indian exports to the EU did not fall even after the global financial meltdown in 2008. India's stake on the Continent aside, Europe is also the world's largest economy and the biggest global wealth market. MTV and CNN may have altered perceptions ephemerally and created illusions about the US, but it is Europe that continues to set the standard for most things internationally. Manufacturers know that there is something called European specifications, which continue to be the hallmark of quality and - as in the case of automobiles, for example - the touchstone for safety and social responsibility.

It is not very well known in this country that Europe is India's largest source of foreign direct investment, higher than even the dodgy position of Mauritius on the FDI table because of the island's somewhat mysterious role as a source of investments. If one looks at Indian investments abroad, Europe is high up on that chart too. Such investments are of high standards, an example of which was the acquisition of Jaguar and Land Rover by the Tatas.

Hindustan Lever is a household name in India. Every middle-class child grows up on Lever products. Indians also know Siemens and ABB well, to name two other European companies. Not so with Honeywell or Raytheon of the US. So, there is an inherent association in daily life between India and Europe. Perhaps because of this historic association which long predates the arrival of American multinationals in India, Europe in general and relations with the Continent are sometimes taken for granted. But it is a mistake that needs to be corrected.

The composition of the Group of Eight industrialized countries is evidence of the need for course correction. The bulk of the G-8 is made up of Europe and it is a composition that will not change any time soon. The EU is an institutional member of this group, represented by the president of the European Council and the European Commission.

The analyst, Lubica Schulczova, acknowledges that "2014 was a year of discontent across the old continent". Predicting the EU's outlook for the new year, she wrote in WBP Onlinethat in 2015 "the economic recovery will probably remain uneven... The EU is projected to grow by just 1.5 per cent, the euro zone by 1.1 per cent. Germany will certainly maintain its place as the powerhouse of the European economy".

Berlin may not remain the engine of growth in Europe that it once was, but it will, all the same, be among the top five economies of the world. At the end of the day, it should not be overlooked that other than the US dollar, the euro is the only global currency. It will remain so even if there is any further global financial shift.

Because India's relations with the EU have been consistently understated, an attempt by Manjeev Singh Puri, the ambassador in Brussels to "showcase the significant events of history pertaining to India's vibrant relations with the EU through...rarest of photographs to texts of key documents" deserves praise. The initiative is timely because India's "strategic partnership" with the EU has just completed a decade. Lately, the term, strategic partnership, has tended to acquire the shades of a cliché. In Washington, the number of countries with which the State Department has launched strategic partnerships makes so long a list as to be meaningless in terms of the substance of such partnerships.

However, the EU has only 10 strategic partners, and India is one of them. Unlike in Washington, this makes the partnership very special in Brussels. The glossy book that Puri has just brought out, India and the European Union: Milestones, also commemorates half a century of diplomatic relations between India and the avatars of European integration at various stages of its evolution into the present EU. In his foreword to the book, the ambassador to the EU and Belgium writes, "In 1962, India became one of the first Asian countries to establish diplomatic ties with the European Economic Community when Ambassador K.B. Lall presented his credentials to Mr Walter Hallstein, the first President of the Commission of the European Economic Community."

The book is a reminder of how diplomatic milestones are often incubated not at chancery high tables, but in casual conversations or routine events in the lives of people who happen to be players in relations between States. Since the story of how India and the European Union: Milestones came to be published is only mentioned in passing in the book, it is worth narration here. Soon after the Puri was posted to Brussels last year, Namrita Puri, the ambassador's wife visited her husband in his office in the typically Belgian street of Chaussée de Vleurgat and noticed that the list of previous ambassadors on the wall plaque began with the name of K.K. Chettur, better known in our time as the father of Jaya Jaitley, the long-time companion of George Fernandes. Chettur presented his credentials only in 1954.

This had escaped Manjeev Puri, for whom Brussels was a homecoming. His father, S.S. Puri, was ambassador to the EU from 1981 and his name was on the plaque all right - and, of course, the son's name would be put in there too very soon. Namrita's memory flashed back to the time she was an office bearer of the External Affairs Spouses Association in Delhi. Laila Tyabji, the daughter of the Indian Civil Service luminary, Badruddin Tyabji, had told Namrita then that Laila's father had set up the mission in Brussels in 1948. What happened to the names of Chettur's predecessors? The quest developed into a full-scale effort to record the history of India's diplomatic engagement with the EU and with Belgium, an effort in which the Puri children, Nooria and Sukrit, joined for the sake of their father and grandfather. India and the European Union: Milestones is the product of that idle conversation between Namrita and her husband on a wintry Brussels afternoon.