NEW DELHI: India is doubling down on its relations with Europe, with the first virtual summit in 20 years between Prime Minister Narendra Modi and his Luxembourg counterpart Xavier Bettel on Thursday. India and Luxembourg signed three bilateral agreements mainly in the financial sector, even as both countries reaffirmed the need to finalise an India-EU FTA at the earliest.
Foreign minister S Jaishankar recognised the difficulty of the trade negotiations with the EU. Stressing that India wanted a “fair and balanced FTA with the EU,” Jaishankar said on Wednesday, “I recognise that an FTA with Europe is not an easy negotiation. In the world, it must be the most difficult negotiation because it’s a very high standard FTA,” he said. The two sides, he told a think tank in an online discussion, are looking at various proposals, including a separate agreement on investments or an “early harvest” deal. Out of six recent virtual summits, India has had four with European countries — EU, Denmark, Italy and Luxembourg.
Jaishankar added India wanted to concentrate on mobility agreements with EU countries to facilitate the movement of skilled professionals. That has been at the crux of India’s trade negotiations.
“The meeting focused constructive engagement on our bilateral relationship, especially given the strength of the Luxembourg economy and our needs. It focused on the financial sector, fin-tech, green financing and space applications,” said Sandeep Chakravarty, joint secretary (Europe West).
The three agreements signed are:
Luxembourg Stock Exchange with State Bank of India (SBI)
Luxembourg Stock Exchange with the India International Stock Exchange (INX)
LuxInnovation and Invest India.
“Luxembourg Stock Exchange and funds based out of Luxembourg are the third largest investors in India. Foreign portfolio investments from Luxembourg total more than Rs 3 lakh crore. It is the largest after the US and Mauritius,” said Chakravorty.
The agreements with the Luxembourg Stock Exchange provide for cooperation in the financial services industry. It will enable the maintenance of security markets in both counties with a focus on ESG (environmental, social and governance) and green finance in the local market. The third agreement between LuxInnovation and Invest India is to support and develop mutual business cooperation between Indian and Luxembourg companies, especially when it comes, promoting and facilitating inbound FDI.
Chakravarty said India had appointed a trade commissioner to the EU and the high-level mechanism to resume trade talks is in place and preparing for the next round.
According to official sources, Luxembourg’s importance stems from it being one of the founding members of the European Union (EU) as well as one of the three official headquarters to the EU’s institutions along with Brussels and Strasbourg.
Officials said Modi had met Bettel three times in the past. Chakravarty added, “the Luxembourg PM said he sees our PM as a friend and he is very keen to visit India and welcome Mr Modi in Luxembourg. He wants PM to inaugurate the Indian Embassy in Luxembourg.”
Luxembourg is the 5th largest investor from the EU after the Netherlands, Germany, France, Cyprus and the 15th largest investor in India; since July 2014, Luxembourg’s cumulative investment in India has more than doubled – from $1.088 billion to $3.082 billion (March 2020). Luxembourg is the third-largest source of Foreign Portfolio Investments (FPI) investments in India after the US and Mauritius accounting for approximately 8.5% of these investments.