India and European Union Urge Trade and Strategic Agreements by 2025
India and European Union Urge Trade and Strategic Agreements by 2025India and European Union (EU) are set to finalize a much-awaited Free Trade Agreement (FTA) by the end of 2025, a promise made in a meeting between Indian Prime Minister Narendra Modi and EU Commission President Ursula von der Leyen in New Delhi on February 28, 2025. The two also touched upon a new strategic security and defense partnership agreement to supersede the existing Strategic Roadmap for 2020-2025. This alliance is likely to have a major impact on the forthcoming EU-India summit later this year. Von der Leyen was in Delhi heading the largest EU Commission delegation to India, with more than 20 meetings taking place between different Indian ministries.
A blueprint for Collaboration Across Multiple Sectors
Based on their talks, Prime Minister Modi presented a broad roadmap for cooperation that covers important areas like trade, technology, investment, innovation, green growth, security, skilling, and mobility. He also underscored the objective of achieving a mutually advantageous bilateral FTA by the end of the year, which represents a strong political push for negotiations. In spite of the initial setbacks, the call for a quick conclusion in FTA negotiations is designed to give the necessary push to the teams to gear up for the next phase of negotiations set to take place from March 10 to 14 in Brussels.
Challenges in Wrapping Up the FTA Talks
The India-EU FTA negotiations, initiated in 2007 and reinstated in 2022, have had major challenges over the years. There are significant disagreements, mainly regarding tariffs, with the negotiations unable to make substantive headway. With the clock ticking towards a deadline, concerns have arisen regarding whether it will be possible to close the gaps in the span of months. One significant sticking point continues to be Indian tariffs on EU autos and beer. An EU official stated that unless India commits to lowering these tariffs, the FTA agreement is not going to happen. They further said that a strong commitment from India regarding the issue of cars is the only way an agreement can be signed.
EU’s Demands on Tariffs and India’s Position
The urgency to settle the tariff matter was emphasized by an EU official, who questioned whether the FTA could be finalized without major adjustments in India’s tariff regime, especially on European automobiles and liquor. As a reaction to the difficult negotiations, Ministry of External Affairs (MEA) Secretary (West) Tanmay Lal admitted that there is a divergence between the two parties but reaffirmed that the two leaders had tasked their teams with a clear mandate to seal the deal. There is, however, guarded hope, since comparable trade arrangements with other nations, such as the UK and Australia, have also suffered similar setbacks.
Geopolitical Context and the Push for Stronger Ties
In her speech, von der Leyen underscored the increasingly significant geopolitical environment that makes closer India-EU relations imperative. She referred to the changing patterns in global politics, particularly regarding trade tariffs and the changing approach of the United States under President Donald Trump. The EU is eager to cut its dependencies on China and strengthen relations with countries such as India as a balancing factor against increasing geopolitical tensions. Von der Leyen also underscored India’s strategic significance to Europe’s future foreign policy and termed the scope for India-EU relations becoming one of the century-defining partnerships.
Visible Tension in Relations in Recent Years
The India-EU relationship has been strained in recent years, especially following the Russian invasion of Ukraine in 2022. This tension was evident in the lack of an annual EU-India summit since 2020 and the infrequent nature of high-level meetings. There have also been differences with India’s policy towards Russia, specifically its vote abstention at the United Nations for the Ukraine conflict and its continuous Russian oil imports, which have risen sharply since 2022. In spite of these points of contention, the EU has gone out of its way to deepen relations with India, especially in the backdrop of changing American foreign policy.
No Sanctions Mentioned During Recent Talks
In a revelation that showcased the nuanced dynamic between the EU-India relationship, MEA authorities made clear there were no express discussions over sanctions at the von der Leyen meeting with the Prime Minister of India. The move is concurrent with the latest from the EU announcing its imposition of a 16th tranche of sanctions against Russia, which involved placing an Indian business group under sanction found to be offending with regard to Russian oil sales and weapons sales. In spite of these continued strains, the EU reaffirmed its pledge to protect Ukraine’s security and underscored that sanctions on Russia would be maintained as part of its larger foreign policy aims.
A Glimpse into the Future: A Shifting Relationship in Flux
While the EU-India relationship is strained, both parties seem committed to deepening relations through commerce, security, and diplomatic relations. The continuing FTA negotiations, along with the larger geopolitical factors von der Leyen brought into focus, reflect a movement towards closer cooperation. Whether or not these talks result in a breakthrough on essential topics, like tariffs and strategic alignment, however, is yet to be seen. As India and the EU navigate these challenges, their alliance has the potential to have significant implications for both regions, with global implications for trade, security, and geopolitics.
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