How Trade and Technology Council agreement with EU can help India shape global tech ecosystems

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Earlier this year, Prime Minister Narendra Modi met with the European Union President Ursula von der Leyen and announced the setting up of the India-EU Trade and Technology Council (TTC). The joint statement released by the two leaders on the launch of the council described the TTC as a body that was responsible for the “strategic coordination mechanism [that] will allow both partners to tackle challenges at the nexus of trade, trusted technology and security, and thus deepen cooperation in these fields between the EU and India”.

Since the official press release of the TTC, there have been no more follow-up announcements or movement on the front. This has raised questions about how the Council should function and its role in determining the technology trade agreements between the two entities. What would be the methods of cooperation and the focus areas for India and the EU? These still remain to be answered and delved into. But firstly, it is imperative to understand why the TTC is such an important foreign policy and technology project that must be prioritised in the current Information Age.

Why TTC Matters for India

When the EU decided to sign the TTC agreement with India, it was the first instance of India signing a trade-related agreement specifically concerning technology. It is also the second ever TTC signed, with the other one taking place between the US and EU last year. If this initiative picks up steam and eventually engages more nation-states, there is a possibility that it can turn into a multilateral trade agreement specifically related to technology-related goods and services.

This emphasis on technology trade remains the need of the hour, considering the complexity and fragility of technology supply chains. The Covid-19 pandemic, especially, exposed the bottlenecks and dependencies in critical technology supply chains. This has made international collaboration and multilateralism in the technology domain a necessity, not a choice. This is where trade comes into the picture. Cross-border movement of raw materials, manufacturing equipment, and finished technology goods are necessary to keep the efficiency of technology ecosystems at a respectable level. Trade is essential to ease any supply chain shocks and vulnerabilities that still remain prevalent in certain technologies. The TTC offers India an opportunity to integrate itself into the current global technology supply chains and become an indispensable part of the entire ecosystem.

Another critical aspect in the technology sector is the inability of only industrial policies to drive growth and give the exact desired results. Funding through the influx of money by government policies and protectionist measures to shield the domestic industry from competing on the global stage to achieve self-sufficiency in critical technology sectors remains a fallacy. Instead, this can disincentivise innovation and growth. Favourable trade policies can help buttress and support government initiatives in the tech sector. The TTC is a gateway for India and its domestic tech 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 a more effortless flow of technology products with lesser import restrictions and export duties.

Methods of cooperation

So, how can the TTC make a difference in the current trade regime in India and the EU? The removal of high tariffs and other trade barriers to improve the trade volume between the two entities is the first step toward making the TTC a credible body. However, the cooperation need not be focused on the trade aspect only and can encapsulate two main areas which the TTC can focus on:

  • Human Capital Movement 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 scientific and technical knowledge dissemination. While technology accessibility and cutting-edge development of emerging tech remain barriers for Europe and India, the TTC can prioritise 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 human capital movement, thereby creating a robust workforce in both regions.

 

  • Tech Infrastructure Development: Another aspect of the TTC must include initiatives to develop and build the necessary infrastructure for technology projects in both regions. In the Information Age, infrastructure development is not restricted to just roads, highways and ports. Digital and technology infrastructure is a crucial enabler of economic and technological growth. Nation-wide telecommunication networks, renewable energy grids, semiconductor fabrication facilities and even electronic goods assembly centres are all critical infrastructure that has the potential to improve the overall access to technology for the citizens. But this kind of infrastructure needs a considerable investment and technology import from elsewhere. The TTC can be a starting point for facilitating and ensuring joint tech infrastructure projects are kick-started on each other’s soil. It can eventually help in the end-to-end completion of these projects, benefiting the state and its people.

Focus on comparative advantages

Finally, the areas of focus for the TTC must rely on the comparative strengths that India and the EU both possess. It might so happen that some technological areas in which India has a comparative advantage might be the EU’s pain point and vice versa. The TTC must be an instrument to bridge that kind of gap that might exist.

For example, India is a giant in the biotechnology space, especially with its production capacity of drugs and vaccines. The EU would benefit from importing these products from India at a low cost under the TTC agreement. Similarly, the EU has a majority of telecommunication giants such as Nokia and Ericsson. They have pioneered in developing state-of-the-art telecommunication equipment used to build large-scale networks. India can benefit from importing equipment from these firms without tariffs and at lower prices under the TTC agreement. This can help the Indian state create a robust telecommunications infrastructure network and provide high-speed internet connectivity, even in rural areas.

Similarly, the TTC must identify such technology areas in which India and the EU can complement each other. This must be a priority for the TTC as both India and the EU, as technological powers, can collaborate to improve their share in specific value chains.

The India-EU TTC Agreement can help the Indian government mark its presence in the global technology ecosystems and compete internationally. Trade policy remains essential to complement any industrial policy that the government kick-starts in the tech sector. The TTC offers an excellent opportunity for both India and the EU to harness trade to develop its domestic tech sector while enabling multilateral cooperation in the field.

The author is a research analyst, The Takshashila Institution. Views are personal.

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How Trade and Technology Council agreement with EU can help India shape global tech ecosystems
How Trade and Technology Council agreement with EU can help India shape global tech ecosystems
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