The India-European Union relationship has been dormant for some time now for several reasons. It is time to revive it, beginning by enhancing trade and investment and underscoring political engagement, as well as exploring new opportunities such as urban development. Sustainable urban development holds much potential for developing bilateral cooperation. It is a priority for Modi, and an area in which the European Union has significant expertise. Shortly after assuming office in 2014, Prime Minister Narendra Modi announced plans to set up 100 smart cities in the country. Cities already contribute a significant chunk of India’s $1.9 trillion GDP, and this share is projected to grow further.
In August last year, the Prime Minister also launched ‘Make in India’ to facilitate business and foreign investments and cut red tape. India’s construction industry accounts for more than 10% of India’s GDP. The government has now fully liberalised foreign investment in townships, regional-level infrastructure, urban infrastructure (transport, water supply, sewerage and sewage treatment) as well as in ‘industrial park’ projects. This implies substantial business opportunities.
Several countries have picked up on this prospect to robustly enhance cooperation with India on urbanisation. During Modi’s visit to Tokyo in August-September 2014, Japan agreed to invest $35 billion in Indian infrastructure and energy development, in addition to doubling its foreign direct investment over the next five years and a commitment to build a bullet train (Shinkansen) project worth $10 billion.
Shortly after, during Chinese president Xi Jinping’s visit to India, 12 agreements were signed and China pledged to invest $20 billion in the Indian infrastructure and manufacturing sectors, in addition to building high-speed rail links and two industrial parks. India has expanded cooperation on nuclear energy with Australia and Canada, and the US too has agreed to collaborate on the development of three Indian smart cities: Allahabad, Ajmer and Visakhapatnam. Furthermore, the US and Canada have set up dedicated bilateral infrastructure platforms with India.
Individual European Union member states, in particular Germany, France and Britain, have been collaborating with India on several aspects of urbanisation — infrastructure, clean energy, waste management. But cooperation on a European Union-wide level remains very limited. The European Union as an entity remains relatively absent from India’s infrastructure sector, but could become the entry platform for its 28 member countries to the vast Indian infrastructure market. The European Union already has a pre-existing model for cooperation on sustainable urbanisation with China that promotes exchanges and cooperation between a large number of European and Chinese stakeholders. By tapping into Modi’s ‘Make in India’ project, a EU-India urbanisation partnership could help increase the intrinsic worth of a strategic partnership with the European Union in New Delhi’s eyes.
The European Union-India strategic partnership needs a new impulse. Partnering with India on its urban development agenda by tapping into the ‘Make in India’ project and launching an EU-India urbanisation forum would contribute to revive an unresponsive partnership.
(Gauri Khandekar is Head of Asia programme, FRIDE. The views expressed by the author are personal.)