How the Trade and Technology Council agreement with the EU can help India shape global tech ecosystems
Prime Minister Narendra Modi. ANI
Earlier this year, Prime Minister Narendra Modi met with European Union President Ursula von der Leyen and announced the establishment of the India-EU Trade and Technology Council (TTC). The joint statement issued by the two leaders at the launch of the council describes the TTC as a body responsible for the “strategic coordination mechanism [that] will enable both partners to address challenges at the crossroads of trade, reliable technologies and security, and thus deepen cooperation in these areas between the EU and India”.
Since the official TTC press release, there have been no further follow-up announcements or movement on the frontline. This has raised questions about how the Council should operate and its role in determining technology commercial agreements between the two entities. What would be the modes of cooperation and areas of intervention for India and the EU? These still remain to be answered and explored. But first, it is imperative to understand why the TTC is such an important foreign policy and technology project that must be prioritized in today’s information age.
Why the TTC is important for India
When the EU decided to sign the TTC agreement with India, it was the first time that India had signed a trade-related agreement specifically on technology. It is also the second TTC ever signed, the other being between the US and the EU last year. If this initiative gains momentum and eventually engages more nation states, it is possible that it will evolve into a multilateral trade agreement specifically related to technology-related goods and services.
This focus on technology trade remains the need of the hour, given the complexity and fragility of technology supply chains. The Covid-19 pandemic, in particular, has exposed bottlenecks and dependencies in critical technology supply chains. This has made international collaboration and multilateralism in technology a necessity, not a choice. This is where trading comes into play. Cross-border movements of raw materials, manufacturing equipment, and finished technology products are necessary to keep the efficiency of technology ecosystems at a respectable level. Trade is key to mitigating the supply chain shocks and vulnerabilities that still exist in some technologies. The TTC offers India the opportunity to integrate into today’s global technology supply chains and become an indispensable part of the entire ecosystem.
Another critical aspect in the technology sector is the inability of industrial policies alone to drive growth and deliver the exact results desired. Financing through the influx of money through government policies and protectionist measures to shield domestic industry from competing on the global stage to achieve self-sufficiency in critical technology sectors remains a mistake. Instead, it can discourage innovation and growth. Favorable trade policies can help underpin and support government initiatives in the technology sector. The TTC is a gateway for India and its domestic technology sector to improve access to global technology goods and services, especially in a thriving market such as the EU. This can create an open market for an easier flow of technology products with fewer import restrictions and export duties.
Methods of cooperation
So how can the TTC make a difference to the current trade regime in India and the EU? Removing high tariffs and other trade barriers to improve the volume of trade between the two entities is the first step in making the TTC a credible body. However, the cooperation does not have to focus only on the business side and can encompass two main areas that the TTC can focus on:
- Movement of human capital One of the key areas that the TTC can focus on is the development and creation of a cross-border human capital model dedicated to improving the dissemination of scientific and technical knowledge. While technology accessibility and cutting-edge development of emerging technologies remain barriers for Europe and India, TTC can prioritize and foster people-to-people interaction. Scientists, engineers and other technology workers must be allowed to engage in R&D and implement large-scale projects in each other’s countries. The exchange of STEM employees in India and the EU can help facilitate cross-border movement of human capital, thus creating a strong workforce in both regions.
- Development of the technological infrastructure: Another aspect of the TTC is to include initiatives to develop and build the infrastructure needed for technology projects in both regions. In the information age, infrastructure development is not limited to roads, highways and ports. Digital and technological infrastructure is a key enabler of economic and technological growth. Nationwide telecommunications networks, renewable energy networks, semiconductor manufacturing facilities, and even electronics assembly centers are all critical infrastructure that has the potential to improve access. comprehensive to technology for citizens. But this type of infrastructure requires considerable investment and the importation of technology from elsewhere. The TTC can be a starting point to facilitate and guarantee the start of joint technological infrastructure projects on each other’s soil. It may eventually help to carry out these projects from start to finish, for the benefit of the State and its population.
Focus on comparative advantages
Finally, the areas of focus of the TTC should build on the comparative strengths that India and the EU possess. It may be that certain technological areas in which India has a comparative advantage are the weak point of the EU and vice versa. The TTC should be an instrument to bridge this kind of gap that might exist.
For example, India is a giant in the field of biotechnology, particularly with its capacity to produce drugs and vaccines. The EU would benefit from importing these products from India at low prices under the TTC agreement. Likewise, the EU has a majority of telecommunications giants such as Nokia and Ericsson. They were pioneers in the development of advanced telecommunications equipment used to build large-scale networks. India can benefit from importing equipment from these companies duty free and at lower prices under the TTC agreement. This can help the Indian state to create a robust telecommunications infrastructure network and provide high-speed internet connectivity even in rural areas.
Likewise, the TTC should identify areas of technology where India and the EU can complement each other. This must be a priority for the TTC because India and the EU, as technological powerhouses, can collaborate to improve their share in specific value chains.
The TTC agreement between India and the EU can help the Indian government to make its presence felt in global tech ecosystems and compete internationally. Trade policy remains essential to complement any industrial policy the government launches in the technology sector. The TTC provides an excellent opportunity for India and the EU to harness trade to develop its domestic technology sector while enabling multilateral cooperation in this area.
The author is a research analyst, The Takshashila Institution. Views are personal.