CALCUTTA, India, Nov. 12 (UPI) -- Bureaucratic mouthful of a name aside, the India and European Union agreement to join in a "strategic partnership" indeed adds a new dimension to economic and political ties between the two sides; one, India, the second-most-populous country, and the European Union, a 25-country union with 455 million people trying to emerge as a global powerhouse.
But for India, besides the fact that this partnership "implies serious intent to respect each other's concerns and interests," as said India's Prime Minister Manmohan Singh, this deal carries a far bigger implication. Perception-wise, it catapults India into the big league.
India is only the sixth nation with which the EU has a strategic partnership after the United States, Canada, Russia, Japan and China. Obviously, compared to the other five, India's economy is nowhere at par. Therefore, say experts, "if European Union is offering to upgrade ties with India, it is more a recognition of its potential of India's market and technological abilities."
For that matter, it appears that even the EU feels the same way. The initiative to upgrade in fact came from the Union, which said "India was emerging as a regional and global leader ... engaging increasingly on equal terms with other world powers."
Perception apart, where else does India stand to gain? The EU actually beckons India in many ways.
For one, the EU is India's largest trading partner, and EU-India trade has grown from 4.4 billion euros in 1980 to 28.4 billion euros in 2003. But despite this growth, bilateral trade with the EU represents just 1.6 percent of total EU imports of goods and 0.8 percent of services imports.
After the recent enlargement in May, when 10 new countries joined the ranks of the 15-member European Union, the EU marketplace has resulted in a base of 455 million consumers, with a combined gross domestic product (GDP) of 10 trillion euros, accounting for a fourth of the world's gross national product (GNP).
So, the EU could be India's next manna in terms of trade.
India is significant for EU too. Experts say that currently the EU is struggling to meet the United States' challenge to remain a major economic player. It is in the EU's interest, hence, to cooperate with the large up-and-coming economies of Asia, more specifically China and India.
After all, the Asian region now produces 23 percent of the global GDP, and that share is rising. According to a report by Goldman Sachs, the dollar size of the Chinese economy would surpass that of the United Kingdom and Germany by 2007, while India would surpass France by 2020 and Germany by 2023.
Moreover, the EU has received a firm commitment from India to participate in its multibillion-dollar Galileo navigation-satellite project, which is due to come online in 2008 as an alternative to the United States' Global Positioning System. China has put up 230 million euros (US$297.5 million) to join. India had discussed a possible sum of 300 million euros.
Nevertheless, the trade-offs for India from this partnership are greater. The EU, for instance, is also extremely significant for India's burgeoning information technology and outsourcing sectors that have become lightning-rod issues in the United States and also in Britain to some extent.
For those troubled about the H1-B work visa cutback from the United States, following the current outsourcing backlash, this agreement could open the European job market for Indian professionals.
"It's in their interest to let in our knowledge workers," said the Indian ambassador to the EU, Rajendra Abhyankar. And India has already done considerable homework to put the point across. It has, for instance, figured that the EU as a whole is short of 700,000 knowledge workers, largely in the IT sector. It has also drawn attention to the fact that the EU's is an aging population. The two taken together would indicate that EU needs people -- of course, the right kind of people," said Abhyankar.
India has urged EU to identify the sort it needs as well as consider what kind of work could be outsourced, if only to give its own industry a competitive edge, he said.
"The call-center type of outsourcing is possibly not right because of the language problem (the only English speaking country is Britain, which is not yet a member of the EU), but process outsourcing is a distinct possibility, especially in areas like industrial and architectural design, distance medicine, biotechnology, financial processing and so on," said Abhyankar.
Meanwhile, India is hoping that this agreement would enable it to attract more foreign direct investment from Europe, following India's United Progressive Alliance government's latest announcement that it is setting up economic zones with advantageous taxes, tariffs and labor laws to encourage foreign investment.
But economic benefits apart, the upgrading of the EU-India relationship to a strategic partnership would help India in its quest to join the United Nations Security Council as a permanent member. Despite initial strident criticism by some European countries over India's nuclear tests in 1998, the EU now recognizes India's "impeccable record in non-proliferation." For India then, the EU could prove to be a multilateralist ally in resisting what India perceives as U.S. unilateralism.
