Indian Defense Minister Singh and U.S. Defense Secretary Austin File Photo © Web Image
To reduce its dependence on China, the West has placed India at the center of its Asia policy, according to the German newspaper “Handelsblatt”. Europe is seeking a new partnership in Asia. But foreign investors are skeptical. German economic circles warn of the danger of disappointment.
European and U.S. governments see India as their preferred new partner in Asia so that they can reduce their dependence on China on the continent. EU foreign ministers are expected to adopt a joint Indo-Pacific strategy in April. This would make India the center of European engagement in the region. But observers see India’s assertive attitude toward investors as a warning sign. Foreign companies face a great deal of uncertainty in India. Everyone who wants the region to overtake China and become an unproblematic business partner for the West is in danger of being disappointed.
The Cairn dispute is a testament to the unpredictability of India’s economic policies. British crude oil company Cairn has been required to restructure its operations for the past decade. As a result of the company’s failure to pay, the Indian government seized the assets of foreign investors.
Also, India has a similar dispute with Vodafone. A tribunal in that dispute declared a multi-billion dollar tax claim by the Indian government to be illegal. But India did not accept the arbitration result and appealed to a higher court.
India’s lack of reliability presents an obstacle to one of the main goals of European and U.S. Asia policy: in light of growing tensions with China, the West is focusing on diversifying supply chains and production locations in Asia. The West sees India as the preferred location. With a population comparable to China’s, India could indeed be a promising option. The West has launched a diplomatic offensive on this.
The EU plans to hold an EU India summit in May in the Portuguese coastal city of Porto. Indian Prime Minister Narendra Modi will meet with European heads of state and government. The agenda may include the resumption of negotiations on trade and investment agreements. EU Foreign Affairs Commissioner Borrell said, “Both sides are banking on real progress in this regard.”
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