Since Independence, India has shared a cordial relationship with the Central and Eastern European (CEE) countries. As time progressed, India and the CEE countries which were part of the erstwhile Soviet Union shared an amicable relationship till its disintegration.1 Since then, economic relations between the countries have dwindled. India contributes somewhere between 1-2% of the total imports of the Eastern European countries.
Keeping aside the economic point of view, diplomatically, India had little to no bilateral engagement with the CEE nations since the fall of the Soviet Union. Prime Minister Narendra Modi has not visited a single Eastern European country which indicates that he has no intention to re-establish diplomatic interaction with the CEE.
However, it is necessary to re-engage diplomatically and economically with the Eastern European nations. There are two major reasons for this. One, China has a sizable investment in infrastructure in these nations, which has created a huge trade deficit and pushed them into the Chinese debt trap. Two, a lack of motivation from our side will put a dent in our ambition to become a leading partner to European nations.
The countries in the region need infrastructure development to boost their economic growth. Most CEE countries have seen steady economic growth in recent years, with countries like Romania growing by 5.6% in 2017 and the region witnessing 2.5% growth overall in 2017 which is an increase, from 2.2% in the latter half of 2016.2
The Indian government lacks the luxury of handing out large sums of money, either as loans or as aid for infrastructure building. However, India�s Overseas Direct Investment (ODI) has increased considerably, in the past few years. The bulk of this is owed to the private sector, which has pursued mergers and acquisitions transactions. Eastern Europe has a lot of natural resources and most of the countries rely on exporting their natural resources. Indian private companies in the manufacturing and services sector need incentives from the Indian government to invest in the Eastern European market. For example, Apollo Tyres Pvt. Ltd. has invested almost EUR 500 million to build a plant in Hungary due to availability of cheap labour and access to the European automobile industry.
Countries like Albania, Croatia, Latvia, Bosnia, Montenegro, Serbia and North Macedonia have all been partner countries to the Indian Technical and Economic Co-operation (ITEC). Steady growth in investment in the region and restriction on labour mobility has slowly increased employment opportunities but the population lacks the requisite skills which has driven up unemployment rates considerably.
The Government of India in collaboration with the governments of Eastern European nations can encourage skill development and capacity building through the ITEC programme. An environment to give an opportunity to educational institutes to collaborate with the premier Indian institutes for exchange of ideas. The Ministry of External Affairs has to look into the importance of capacity building in Eastern Europe and create another programme within the Developmental Partnership Assistance �II (DPA-II) which oversees this happens in the region. The SCAAP is successful as India has spent over USD 1 billion in capacity building for the people resulting in employment opportunities for them.3
Economic trade between India and the CEE has been dismal to say the least since the past two decades and in order to boost trade; India can introduce a duty-free trade scheme between India and CEE. This scheme was successful in the case of Africa, where trade with India has increased to USD 59.9 billion in 2017 making India the fourth largest trading partner to Africa.4
CEE is a region of untapped potential for India. The ongoing US-China trade war has created a window of opportunity for India to push its trade and economic aspirations further afield to Eastern Europe. This will give us access to European markets and the re-establishment of diplomatic ties can bolster India�s image in the region. It will highlight the paradigm shift in the foreign policy of a resurgent India under the idea of �enlightened self-interest�.5