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| India-Austria Ties. Source: IndiaTies |
Backdrop-
On 10 July 2024, PM Shri Narendra Modi visited Vienna, the capital of Austria. The visit assumes significant importance as it is after 41 years an Indian Prime Minister has visited Austria, with the last visit being of Smt. Indira Gandhi in 1983. PM Modi in his trip to Austria expressed confidence in improving India-Austria ties in the future.
Austria is one of the foremost countries of the European Union which established cordial relations with India in 1949 when India was framing its constitution. Indian diaspora forms a very crucial part of the Austrian society and there are socio-economic similarities between India and Austria which have influenced its engagement over the years.
History & Overview Of India-Austria Relations-
Austria is a predominantly mountainous nation loocated in Central Europe. The nation is a landlocked nation with neighbours like Italy, Switzerland, Slovenia, Hungary, Slovakia, Czechia & Germany. It makes Austria as a centre point in major intra European rivalries which have shaped the country's history over the years. This is much like India which is located amid the greater geopolitical rivalries of the world & has a mountainous terrain in Himalayas. The earlier name of Austria was Ostraicchi till 13th century, the word Austria in 1246 was used for the first time then. Austria also has a rich history of the Habsburg Austro-Hungarian empire which ruled Austria till the 19th century and Austria was also at the epicenter of both the world wars, infact the world war-1 was triggered by the death of Archduke Franz Ferdinand & in the second world war, Austria was an integral part of the axis alliance that was forged between Nazi Germany, Mussolini's Italy and the Samurai's of Japan.
However, in a major re-alignment post the World Wars, Austria along with Switzerland came to form the neutral core of Europe by not aligning with any bloc during the peak of Cold War, for this Austria signed the much famed Austrian State Treaty of 1955 where it pledged total neutrality. The last 120 years of Austrian & Indian history has had some uncanny similarities, like Austria, even India was also a founding member of the Non-Aligned Movement(not to be confused with full neutrality), it also lost a its citizens while fighting for the British Army in both the world wars(in fact the king of Bikaner played a key role in the Treaty of Versailles). India was a crucial part of the Allied Forces in both the world wars. Today, Austria is a hub of multilateralism with the headquarters of OPEC being based in Austria, IAEA headquarters being situated in Vienna, along with various UN headquarters like UNIS being based out of the capital city of Vienna. India & Austria are crucial member states of organizations like WTO, World Bank, OECD & WHO.
Hence, the visit of PM Modi post the visit to Austria post the Russian visit also sends a strong message on India's positions on polarizing topics. The fact that PM Modi reiterated India's stance on the prolonged Russia-Ukraine war is also a testimony to the importance that Indian policymakers attached to the visit.
In the post world war era, both nations have accepted the norm of democracy. Both countries saw a peaceful transition to democracy which also acts as a bedrock towards relations as quoted by PM Modi in his visit to Austria. Both the nations have parliamentary form of democracy with an upper & lower house. The upper house in both the nations represent the states & the lower house is elected directly by people.
The only difference in the lower house elections of both the nations is that in Austria there is proportional representative system & in India there is first past the post system. These similarities between the democracy formats is also the tradition of parliamentary exchanges which have been happening on a year on year basis since 2021. The first of such mechanism was established in the year 2009 which was inaugrated by the visit of Smt. Meira Kumar with a parliamentary delegation.
The India-Austrian relations were established on 10 November,1949. Year 2024 is the 75 years since formal relations were established. Though the visits between presidents & prime ministers have been lower over the past 75 years, but, they have come between regular intervals. The last presidential visit from India to Austria was in the year of 2011 by Smt. Prattibha Patil which came after an interval of 19 years as far as a presidential visit is concerned.
Otherwise, there have been many ministerial level of visits like that of Dr. S. Jaishankar in January 2023 & it was followed by a visit of the Austrian foreign minister Mr. Alexander Schallenberg in March 2022. In both the bilateral visits by the foreign ministers, important treaties like MoU on comprehensive migration, gainful occupation of family members of diplomatic staff, visa exemption for diplomatic passport, cultural cooperation on MoU to name a few.
India-Austria Trade Relations-
India & Austria also enjoy cordial trade relations between them, which is also primarily due to the matching of vision in the political spectrum. India is considered to be an important partner in trade with Austria outside the European Union, as quoted in an article by the ORF. India's GDP is close to 4 trillion$ whereas Austria's GDP is close to 470 billion $. The huge difference is primarily due to the difference in economic structure, technological adoption, geography & population. India's population is close to 150 crores(1.5 billion) & Austria's population is 90 lakh(9 million). India's per capita income is 8230 PPP$ whereas Austria's per capita income is 67,830 PPP$.
India's Economic Complexity score is 0.64 whereas Austria's score is 1.52. Austria has adopted the Euro Currency since year 2002 for greater economic integration, while India has the INR system. The currency used in Austria prior to the Euro was Austrian Schilling whose exchange value with India was on the cheaper side. The current inflation rate in Austria is 3.3% while in India it is 5.1% as per recent estimates. These details have been given as they are important in the estimation of various parameters related to international trade.
India-Austria trade relations have increased massively over the years, Indian exports to Austria in the year 2023 of products totaled to 1.1 billion$. On the other hand, Austrian exports to India in the year 2023 for products totaled to 9,25,704 million$. The total trade of products is at a cumulative 2.1 billion$. Year on Year as far as Austrian exports(from 2022) are concerned have increased by 67.5 million$, whereas, Indian exports (from 2022) have increased by 35 million$.
The top-5 Indian product exports to Austria have been electrical machinery whose value is worth 7 lakh$, vehicles with value of 83,000$ and nuclear reactors with value of 62,000$, organic chemicals have value of 48,302$ & footwear exports worth 42,000$. Overall these 5 projects have a total worth of almost 60-70% of Indian exports to Austria.
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| Indian exports to Austria |
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| Indian imports from Austria |
Meanwhile, the top 5 Austrian exports to India are nuclear boilers(worth 2 lakh crores), electrical machinery(1.27 lakh cr), opticals(77,573 cr), man made fibres(56,000 cr) and organic chemicals(56,000 cr). In Austrian exports also more than 60% of trade is dominated by the top-5 products.
The overall services trade between the 2 nations for the year 2024, Austria exported 140 million$ in year 2020 services to India esp. the equipments of transportation & consumer-equipment services. India did not export any services to Austria since then. This one area results are interesting as Indian growth is mainly translated through services & India's service exports to a high per capita income nation like Austria is minimal.
Major Takeaways:
- Both countries have enjoyed close ties but the lag in visits of prime ministers & presidents on both sides, is a worrying sign though the high level diplomatic exchanges have been frequent of the years.
- Both nations have a similar policy outlook as far as multilateralism is concerned and as far as neutrality is taken into account. In the future it wont be very difficult for India to get the
- India-Austria have expanded the ambit of cooperation in recent years to unexplored areas like cooperation in INTERPOL where India handed over the presidency to Austria in the year 2023.
- India-Austria enjoy cultural relations.
- Growing bilateral trade relations which is a major positive sign.
Suggestions & Impact:
- The space cooperation which is giving a huge boost to Indian economy must be revived in the bilateral relations between the nations. The last major cooperation between India & Austria in this regard have been the 2013 launch of Austrian satellites namely TUGSAT-1 & UniBRITE which were launched at Satish Dhawan Space Centre. Since then there has not been a big ticket space cooperation that has occured, which can occur now when Indian space sector is projected to have a valuation of 13 billion$. Collaborations in this sector would help India and Austria massively. This can also potentially improve the goods & services trade between the 2 countries.
- India & Austria have been strong proponents of multilateralism over decades.One such area of cooperation can be the area of renewable energy & environment where the vision and action of both nations match to a huge extent. Both countries have signed MoUs on such topics in recent history, one possible level of engagement which can improve the relations is to induct Austria into the International Solar Alliance, Global Biofuels Alliance, CDRI & International Big Cats Alliance, of which India is a founding member. This step has the potential to improve environmental collaboration between the nations.
- India should take the support of Austria in order to improve its bid for a permanent nation at UNSC bid. Given, Austria's strong stance over multilateralism, gaining support of such a nation would be beneficial for India in aspects such as managing global optics.
- The unique culture of parliamentary exchanges must also be expanded to state level assembly exchanges between various Indian states & Austrian states. This would help the states in India to play an active role in framing diplomatic policy of our nation. This would also foster greater cultural understanding between the nations in the long run.
- India & Austria must work out a Partial Preferential Trade Agreement (PTA) in a few product clusters that would be of a great value addition of trade between the nations. Some product clusters that must be covered are: Man-made staple fibres, Apparel articles, vehicles other than railway or trams, Electrical machinery & leather articles whose trade balance is high & has increased consistently over the past 4 years. The PTA for these products can then later on be translated into a FTA with Austria & possibly including Austria's neighbours like Switzerland, Slovakia & Hungary in the future. Such kind of a calculated trade moves would certainly boost India's overall trade balance with the European Union at large.
- India must also look to include Austria in its BRICS+ vision whenever the next round of expansion takes place. With such a movie, Austria would also get a greater access to interact & negotiate policies with nations like UAE, Brazil, Egypt all of whom are a part of BRICS+ today. BRICS would also benefit from the induction of Austria into the BRICS+ grouping, as it would boost the multilateral character of the organization, which is crucial in today's day & time.
- The number of supermarkets for the vibrant Indian diaspora in Austria must also be increased.
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| India-Austria Trade Balances of various products Conclusion: To conclude, India-Austria ties have a huge potential to improve in the future given both nations reinnovate & restructure their engagement policy from time to time. |
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