Will Modi’s Europe-Canada tour translate into measurable gains?

Closely after making a five-day three-nation tour to Seychelles, Mauritius and Sri Lanka, to reinvigorate the country’s ties with the Indian Ocean economies, Prime Minister Narendra Modi is about to embark on a five-day Europe-Canada tour, which is eagerly watched by observers world over. The tour assumes significance on several counts.

First, it is a continuation of the successful visits to Japan, Australia and the US over the last year, which not only enabled Modi to translate into trade, technology and defence pacts, but helped him market the ‘Make in India’ campaign that aims to position India as the ‘world’s factory’, in addition to being the top ‘services hub’ globally. Second, it points to the fact that the Modi government is keen on strengthening its foreign policy framework that aims at building and maintaining closer partnerships with not only global leaders such as the US and China, but strategic regional countries such as Japan in addition to key neighbourhood nations.

Significantly, Germany and France—two of EU’s most powerful countries that have been India’s strong trade partners—are a key part of Modi’s travel itinerary. In Germany, Modi is expected to inaugurate the Hannover Messe 2015 fair along with German Chancellor Angela Merkel on April 12 (India is a partner country in the fair). The fair will provide an ideal platform for Modi to showcase India as an emerging manufacturing hub as part of his government’s Make in India campaign. Germany is the eighth-largest foreign direct investor in India—German FDI in India during 1991-2014 stood at $7.57 billion. Modi government’s focus on wind power, science, technology and engineering is expected to further enhance India’s trade with Germany.

France is an equally important trade partner for India. Extending the civilian nuclear pact signed by India and France in 2008 with Areva—a French multinational group specialising in nuclear and renewable energy—selling 300 tonnes of nuclear fuel to Nuclear Power Corporation of India (NPCIL), the Modi government seeks to explore the possibility of a commercial agreement on supply of European pressurised reactors (EPR) for NPCIL’s proposed 9,900-MW Jaitapur Nuclear Power Project in Ratnagiri district in Maharashtra, though such as pact would depend mainly on economic and technical viability.

Modi and French President Francois Hollande are also expected to hold talks on the proposed $23-billion deal involving sale of 126 Dassault Rafale medium range multi-role combat aircraft to India. Also, with foreign direct investment in the insurance sector being raised to 49% from 26%, France is likely to invest $5 billion in the sector.

The European leg of Modi’s trip is also important considering EU is India's largest trading partner, accounting for around 20% of India’s trade globally. Trade between India and the EU was $57.25 billion between April and October 2014 and stood at $101.5 billion for fiscal 2014-15, a major part of which was accounted for by Germany, France and the UK, while other partner countries including Denmark, Finland and the Netherlands too contributed.

Modi will be in Canada from April 14 to 16, making stops at Toronto, Ottawa and Vancouver. The highlight of his three-day visit to Canada will be a public meeting at Toronto that is expected to be attended by a huge NRI crowd. India is Canada's largest trading partner in South Asia and continues to be a priority market under Canada's Global Markets Action Plan.

On the flip side, Modi’s proposed stopover at Brussels stands cancelled after EU failed to respond to India’s proposal to include the EU capital in his itinerary. While it is not clear what led to EU’s muted response, there are those who believe the slow progress of the trial of two Italian marines accused of killing two Indian fishermen in 2012 is one of the reasons, given the fact that EU foreign policy chief Federica Mogherini has been vocal in criticising India’s stance on the issue. India’s refusal to toe the line of the Western countries over the Ukraine crisis and Russia’s role in the conflict is also said to be one of the reasons. However, many European countries see dropping Brussels from Modi’s travel itinerary as a lost opportunity for providing a fillip to India-EU ties.

Notwithstanding the political significance of the tour considering the changing global geopolitical climate, one key question is whether Modi will be able to take the trip beyond the realm of rhetoric and translate it into actionable trade and investment opportunities like what he achieved during the Japan visit which resulted in commitment for close to $40 billion Japanese investment in India.

(Image: Reuters)