By Share Malhotra
It’s been a busy period in India-Italy relations. The relationship has been on a steady upswing, in tandem with the overall India-EU partnership.
For two consecutive years, the Observer Research Foundation’s Raisina Dialogue hosted in partnership with the Ministry of External Affairs has had European chief guests – European Commission President Von der Leyen in 2022, and now Italian PM Meloni in March 2023. These invitations are testament to the prominent place currently being accorded to Europe in India’s foreign policy calculus.
PM Meloni and her Brothers of Italy party came to power in October 2022, making her Italy’s first female PM. Since then, PM Modi and PM Meloni have already met once on the sidelines of the 2022 G20 summit in Bali.
India’s relations with Italy suffered a setback after the unfortunate episode of the killing of two Indian fishermen by two Italian Marines in 2012. It was only when former Italian PM Gentiloni visited India in 2017—an entire decade after PM Prodi’s visit in 2007—that relations once again picked up pace.
In 2018, as we marked 70 years of diplomatic relations, former PM Conte visited India, and in 2020, he held an India-Italy virtual summit with PM Modi that launched a 2020-2024 Action Plan. Fifteen bilateral agreements covering trade and investment to energy transition were signed, marking a crucial milestone in the relationship. In 2021, the second India-Italy Parliamentary Interaction took place, in addition to regular Foreign Office Consultations being held with the 8th one last year. Thus, regular high-level meetings have resulted in the evolution of a more structured and institutionalised relationship.
The two countries are also coordinating in the G20 forum, which was led by Italy in 2021, and whose presidency India currently holds. In 2021, PM Modi met with former PM Draghi on the sidelines of the G20 summit in Rome.
Key pillars of trade, defence and energy
Italy is India’s fourth largest European trading partner and the12th 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. Over 600 Italian companies are present in India, and Italy has previously identified India amongst its top five priority countries for business.
India’s primary exports to Italy comprise metals such as iron and steel, leather, chemicals, gems, and jewellery. Certain Indian exports like steel are increasing given how Russian sanctions and damage to Ukrainian industries, which were previously Europe’s main steel exporters, have compelled Europe to scout new markets for their steel requirements.
India’s “Make in India” initiative and modernisation drive can be complemented by Italian expertise in areas like manufacturing, green tech and defence. Machinery equipment comprise 36 percent of total Italian exports to India, and both economies are structured around SMEs. India also intends to focus more on food processing and sustainable farming, sectors where Italy has substantial knowhow. Overall India-Italy trade would also substantially increase if the EU-India Free Trade Agreement negotiations, that were relaunched last year, would come to fruition.
Enhancing bilateral defence cooperation is strongly on the cards during Meloni’s visit. India and Italy are also exploring joint productions in defence 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.
Another key area of cooperation is energy transition. In 2021, the two countries inked a Strategic Partnership on Energy Transition to advance collaboration on areas like green hydrogen and bio-fuels, and Italy also joined the successful India-France led International Solar Alliance comprising over 90 members.
Cooperation in the Indo-Pacific
Italy began paying attention to the Indo-Pacific region under Draghi’s government. Even so, this is nowhere near countries like France, Germany and even the Netherlands which have released their individual Indo-Pacific strategies. So far, Italy’s commitment to ensuring stability in the region is through the framework of the common EU strategy that was released in 2021. Yet Italy’s relative absence in this important theatre is conspicuous.
In 2021, the India-Italy-Japan trilateral partnership was launched, yet despite the well institutionalised India-Japan partnership and Italy’s strong complementary potential to this, it has not been operationalised. It is helpful that in January 2023, Italy upgraded its relations with Japan to the status of “strategic partnership”, thereby facilitating stronger Italian involvement in Indo-Pacific dynamics. Through the framework of the EU-India Connectivity Partnership, India and Italy can cooperate on providing sustainable connectivity based on their common visions of a stable, open, and rules-based Indo-Pacific. 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. In this context, besides plans to further engagement with “friendly navies”, Rome intends to send its Morosini vessel to the Indo-Pacific for patrolling.
Italy is an export-oriented economy and Europe’s second largest manufacturer, for whom secure supply chains and maritime routes linking Asia to Europe and rules-based trade are important. As Secretary (East), MEA Ms Riva Ganguly Das emphasised, “Italy’s production prowess complements India’s aspiration to develop a reliable connection in global value supply chains”.
Insignificant Russia vs Significant China
Despite fears of her government dampening EU unity on Russia, Meloni has aligned with EU policy and underscored her government’s solidarity with Ukraine, not least because of the €200 billion worth post-pandemic recovery funds that Italy is due to receive from Brussels.
Yet Meloni, and other members of her rightwing coalition that include Salvini’s League and former PM Berlusconi’s Forza Italia, have a long history of pro-Russia sentiment based on the country’s strong economic and cultural ties with Russia. Thus, unlike with other European countries, India’s neutral position on the Russia-Ukraine conflict and its increased oil purchases from Russia do not really play a spoiler in its relations with Italy.
Instead, for India-Italy ties, it is the China factor that garners relevance.
Italy’s staunchly Euro-Atlanticist former PM Draghi, who alluded to China’s “unfair” competitive practices and called out Beijing for its human rights violations in Xinjiang, can be credited for hardening Italy’s attitude towards China. Italy blocked the acquisition of Italian firms by Chinese companies, and Telecom Italia aligned with the EU on restricting Huawei from its 5G network.
Meloni’s right wing coalition is likely to carry forward this hostile approach towards China. Meloni considers Italy’s decision in 2019 to sign an MoU with China on its Belt and Road Initiative a “big mistake” and is seeking a review of the pact when it is due for renewal in 2024. She has also condemned China’s human rights abuses in Xinjiang and Hong Kong as well as its actions in the Taiwan Strait. And as far back as 2008 as Italy’s sports Minister, Meloni urged a boycott of the Beijing Olympics based on China’s policies in Tibet. Her coalition partners also appear more tough on China than Russia, which bodes well for India given its security tensions with China.
Yet, on the sidelines of the G20 summit in Bali, Meloni accepted Chinese Premier Xi Jinping’s invitation to visit China in 2023 and also expressed her desire to increase Italy’s exports to China. This is unsurprising though given Italy’s persistent economic troubles, resulting in the centrality of economic interests in its foreign policy.
Italy’s turbulent domestic politics no barrier
No discussion on Italy is complete without touching upon its domestic scenario, where political instability is the norm rather than an exception. Polls demonstrate that Meloni’s popularity has increased from 26% during last year’s general election to 30% based on factors including the quick passing of a budget in parliament, and successful meetings with Von der Leyen and Pope Francis. Yet in Italy, questions around the survival of any government, including Meloni’s, remain applicable given the country’s volatile politics.
However, despite regular changes of 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.
Besides, predictions for the eurozone are bleak with rising inflation, energy prices and interest rates. These are likely to impact Italy worse than the rest of Europe given its long standing economic woes and public debt at almost 150 percent of GDP. In this context, India is a credible business opportunity for Italy, given its emergence as an economic bright spot during a period of recessionary trends.
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.