John Stevens: If we want to increase trade with India we need to get closer to the EU

John Stevens is a former Conservative Member of European Parliament who stood at the last general election as an independent candidate, against John Bercow.

India’s decision to prefer the French Rafale bid to supply their new fighter aircraft over that of the Anglo-German-Italian-Spanish Typhoon consortium must raise serious questions about our aid policy there. It is not just Andrew Mitchell’s clumsy commentary on the linkage between the two both during, and subsequent to, the Prime Minister’s high-profile visit to Delhi last year. Most serious Conservatives have found it incomprehensible that at such times of extreme budget austerity, no cuts have fallen on the Department of Overseas Development. On this I am entirely in agreement with Ruth Lea’s well-argued recent commentary on this site.

Ruth, and others on ConHome, will not, however, I suspect, agree with some of the reasons which seem to lie behind the Indian choice that may be derived from a recent study sponsored by the Konrad Adenauer Stiftung and the Fondation Robert Schumann on Indian (and Chinese) attitudes to Europe , based on extensive interviews with key opinion formers. This suggested that India’s dominant security concerns are first Pakistan and Islamic expansionism more generally, and second, China, and that her dominant economic concerns are first to be a bridge between the European Union (her largest trading partner) and Asia ex-China (she already has bilateral trade deals with ASEAN and with Korea and Japan) and second, to eventually overtake China and Japan as the West’s principal Asian partner.

Such security objectives require, for the time being, a certain distance from the United States, partly because of the continuing American engagement (however unsatisfactory) with Pakistan and partly because India is keen to avoid appearing to form part of any Kennan-style encirclement of China such as is presaged in Washington’s new Pacific First defence doctrine. This does not mean they do not seek to develop their new Special Relationship with America that emerged when President Bush de facto accepted India’s status as a nuclear weapons state in 2006. In the long run this is the big idea of Indian foreign policy. Only that acquiring French (rather than US or more relatively US-friendly, ie part British) systems is less provocative towards China right now.

Adding in India’s economic objectives, what matters to her is relations with the EU as a trading bloc, not with its individual member states. This will be powerfully demonstrated in two weeks time at the India-EU Summit when it is anticipated a new bi-lateral Free Trade Agreement, covering a whole range of mutual interests, will be signed. But Britain, of course, has problems here. One obvious instance is visas. Indian businesspeople (like their Chinese counter-parts) complain constantly that they have difficulties getting into the EU. But they are exasperated that having got papers for the Shengen Area, they need separate applications for the United Kingdom. Indians are well-informed about Britain and are aware of the possibility that we may become more detached from the EU.

In short, the failure of the Typhoon sale has much to do with Britain in particular (for which the Germans and our other Eurofighter partners may feel they are carrying the can): our perceived continuing strategic closeness to America and our perceived increasing distance from the EU. These considerations trump the deep and ongoing ties between Britain and India, the positive impact of which, in any event, we tend to exaggerate. For example, a most striking dimension to Delhi’s growing rapprochement with Washington is in young Indians’ clear preference for imitating American lifestyles and engaging in American education, rather than looking to us. (The Indian diaspora in the US amounts now to some 2.8 millions, compared to some 1.5 million here.) It should therefore not just encourage us to rethink our ridiculous aid programme. It appears to raise some very awkward questions regarding UK trade policy to key emerging markets as a supposed alternative to continuing engagement with the EU.