[Burning Issues] India-Italy Bilateral Relationship

italy

Context

  • Recently, Italian Prime Minister Giorgia Meloni began a two-day visit to India to raise bilateral relations as part of the G20 Foreign Minister’s meeting in New Delhi.
  • In this context, this edition of the burning issue will elaborate on the India-Italy bilateral relationship.

Background of India- Italy relationship

Historical Aspects:

  • Earlier times: The relationship between India and Italy dates back to ancient times when Indian traders established trade ties with Rome. The Silk Road, which connected Asia and Europe, facilitated the exchange of spices, textiles, and other goods, which was the foundation of these trade ties.
  • The Middle Ages: Italy established trading posts in the Indian subcontinent during the medieval era, thereby enhancing trade ties between the two nations. During his travels to the east, Venetian merchant Marco Polo also visited India in the 13th century and wrote about his experiences there. With Italian city-states like Venice and Florence, Mughal emperor Akbar maintained diplomatic ties.
  • The British era: Italians were involved in the Indian freedom struggle during the British colonial era. Some of them even served in the Indian National Army under Subhash Chandra Bose.

Economic Aspects:

  • After Germany, Belgium, and The Netherlands, Italy is India’s fourth-largest EU trading partner. Since 1988, India has benefited from a favorable trade balance.
  • India is Italy’s second-largest South Asian trading partner, with a bilateral trade relationship worth more than $10 billion.
  • Italy receives engineering products, machinery, and electrical equipment from India, while India receives textiles, leather, chemicals, and pharmaceuticals from Italy. India is home to significant Italian companies like Fiat, Piaggio, Ferrero, and Luxottica.
  • Through investments, joint ventures, and technology transfers in renewable energy and infrastructure, the Italian government has helped India grow its economy.

Political Aspects:

  • In 1947, India and Italy established political relations. India and Italy both have democratic governments and are members of the G20, the United Nations, and other multilateral organizations.
  • High-level political exchanges have occurred between the two nations, including the 2017 trip by Italian Prime Minister Paolo Gentiloni to India and the 2018 trip by Indian Prime Minister Narendra Modi to Italy.
  • However, in 2012, when two Italian marines aboard an oil tanker shot and killed two Indian fishermen off the coast of Kerala, their relationship soured. The incident resulted in a diplomatic impasse, which was resolved over several years.

Cultural Aspects:

  • 1976 marked the signing of the agreement for cultural cooperation. The Cultural Exchange Programme (CEP) between Italy and India involves students from both countries participating in academic courses and language programs. On January 18, 2021, the “Srijan” year-long Festival of India in Italy was launched by the Indian Embassy.
  • India and Italy share a love of food, literature, music, art, and their rich cultural heritage. Italian opera and classical music have devoted fans in India, and Indian classical dances like Bharatanatyam and Kathak are popular in Italy.
  • Indian food is well-liked, and Italian restaurants can be found in most major Indian cities. In order to encourage cultural exchange between the two nations, the Italian Cultural Center in New Delhi and the Italian Embassy in India organize a variety of cultural events and activities.

New developments in the relations

Scientific Cooperation

  • An Agreement on Science & Technology cooperation has existed since 1978. The Agreement foresees three yearly action plans under which a maximum of thirty joint research projects can be undertaken. This agreement was replaced by one signed in Nov 2003.
  • Some of the prime areas of joint research are Electronics, Biotechnology, Design Engineering, Automotive Technologies, Energy, etc.

Defense cooperation

  • An essential tenet of India-Italy relations has long been defence cooperation. With more than 50,000 soldiers, the 4th, 8th, and 10th Indian Divisions contributed significantly to one of the most difficult allied forces’ advances for the liberation of Italy during the Second World War.
  • Joint Defence Committee was established in 2018 to enhance and encourage a “structured dialogue” between Indian and Italian defence firms. Italy supported India’s “intensified engagement” with nuclear, missile and dual-use technology and substances-export control regimes like the Wassenaar Arrangement, the Australia Group, and the Nuclear Suppliers’ Group (NSG) which strengthen global non-proliferation efforts.
  • The two countries are also cooperating in the defense sector, with Italy supplying torpedoes and aircraft components to India.
  • Italy has expressed interest in investing in India’s infrastructure projects such as the Delhi-Mumbai Industrial Corridor and the Smart Cities project.

Why Italy is significant for India?

  • Trade: Italy is the fifth-largest economy in the European Union and the third-largest in the Eurozone after Germany and France with a GDP of $1.86 trillion. It is also the world’s sixth-largest manufacturing nation. India, on the other hand, is one of the fastest-growing economies in the world. The bilateral trade between the two countries has been increasing steadily over the years(US $10 billion), and Italy is one of India’s most important trading partners in the EU.
  • Investments: Italy is India’s fourth largest European trading partner and the 12th largest foreign investor in the country with FDI reaching the US$2 billion mark in 2020. In 2021, bilateral trade was valued at over 10 billion with the balance in India’s favour. Italian companies have been investing in India in various sectors such as automobiles, fashion, food processing, and infrastructure. Likewise, Indian companies are also investing in Italy in the areas of pharmaceuticals, IT, and energy. There is significant potential for further investment and collaboration between the two countries.
  • Supporting Indian manufacturing: India’s “Make in India” initiative and modernization drive can be complemented by Italian expertise in areas like manufacturing, green tech and defense. Machinery equipment comprises 36 percent of total Italian exports to India, and both economies are structured around SMEs.
  • Cultural Ties: India and Italy share a rich cultural heritage, which dates back to ancient times. Italy is home to some of the most famous historical monuments, museums, and art galleries in the world, which attracts millions of tourists every year. Many Indian tourists visit Italy to explore its cultural heritage, and many Italian tourists visit India to experience its rich culture and heritage.
  • Education: Italy is home to some of the world’s oldest and most prestigious universities, which offer a wide range of courses and programs. Indian students are increasingly choosing Italy as a destination for higher education, as it offers high-quality education and exposure to European culture and languages.
  • Defense: India and Italy are also exploring joint productions in defense and aerospace sectors as well as technology transfers, as evident in the agreement between Italian public company Fincantieri and India’s Cochin Shipyard Limited. Fourteen years after the last COAS visit, former Army Chief General Naravane visited Italy in 2021 to re-energise India-Italy defence relations. In addition, India and Italy also have a Joint Working Group on Counter-Terrorism.
  • Energy transition: Another key area of cooperation is energy transition. In 2021, the two countries inked a Strategic Partnership on Energy Transition to advance collaboration in areas like green hydrogen and bio-fuels, and Italy also joined the successful India-France-led International Solar Alliance comprising over 90 members.
  • Despite regular changes of the guard in Italy, continuity in bilateral engagements at the highest levels between India and Italy coupled with strong political will have ensured that the two countries remain on each other’s radar since 2017.

Highlights of the current visit of PM Meloni

  • Now strategic partners: India and Italy have decided to elevate the ties to the level of strategic partnership and identified defence as one of the areas where they can start a “new chapter”.
  • Boost to startups: The meet led to the establishment of a ‘Startup Bridge’ between India and Italy.
  • Bilateral defence exercise: Another important area of mutual cooperation is defence. They also decided to organise joint military exercises and training courses on a regular basis.
  • Enhance peoples mobility: India and Italy also signed a Declaration of Intent on migration and mobility and inked a memorandum of understanding between Rabindra Bharati University, Kolkata, and Italian Consulate General; and Morarji Desai Institute of Yoga and Sarva Yoga International, Italy.

Challenges

  • Low trade w.r.t potential: India and Italy have been trading partners since the Roman era, so the country’s low investment and trade volumes are regrettable.
  • The Enrica Lexie Case: In 2012, two Indian fishermen were killed by Italian marines. The incident was a huge mistake, and the sad fact quickly became politicized.
  • Italy’s current political instability—it is in a very precarious position—with a populist movement on one side and a nationalist, naturalist, or close to fascist on the other.
  • Internal issues of Italy: Italy is a problem for EU due to its low growth rate of 1.5%, high youth unemployment rate of 30%, and the alarmingly high debt-to-GDP ratio of 133%.
  • Non-implementation of the trilateral partnership: between India, Italy, and Japan was launched in 2021; however, despite the well-established India-Japan partnership and Italy’s strong complementary potential, it has not been implemented.
  • Immigration issues: There has been a significant influx of Indian immigrants in Italy, which has sometimes led to tensions between the two communities. Issues such as employment, social integration, and cultural differences need to be addressed to ensure peaceful coexistence.
  • Investment climate: Despite the significant potential for investment, there are some challenges in the investment climate in India and Italy. For instance, India needs to address issues such as corruption, bureaucracy, and regulatory barriers, while Italy needs to address issues such as high taxation and regulatory complexity. Both countries need to work together to create a more conducive investment environment.

Way forward

  • The two countries can facilitate cooperation between the Indo-Pacific and the Mediterranean Sea geographies given India’s permanent presence in the Indian Ocean region and Italy’s in the Mediterranean. Encouragingly, in 2022, the Italian parliament approved a motion to pay more attention to the region.
  • Supporting an effective multilateral system, which would be the best political accelerator to win our battle against the novel coronavirus and to promote sustainable, equitable and durable recovery.
  • Improving trade: the potential of India and Italy as trade partners can be further explored if India and European Union (EU) sign the Bilateral Trade and Investment Agreement (BTIA) which has been in negotiation for over 11 years without conclusion.

Conclusion

  • India’s partnership with Italy is gaining strength on all levels—political, economic, and strategic. PM Meloni’s visit to India at this critical juncture of global politics would further boost ties while also adding fodder to the reinvigorated EU-India partnership. For India-Italy relations, the future is likely to be bright and progressive.
  • In the words of Foreign Secretary Vinay Kwatra said, “With the legacy issues behind us, the door is now open for industries to cooperate more strongly, particularly in the field of manufacturing, co-production, co-design and co-innovation.”

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