India and EU Strengthen Ties Amid FTA Push and Global Trade Tensions
After US President Donald Trump’s threat to hit the European Union (EU) with 25 per cent tariffs, a high-level meeting between Indian and EU leadership on Friday is expected to give a fresh push to efforts to seal an ambitious free trade agreement (FTA). European Commission President Ursula von der Leyen landed in New Delhi on Thursday, bringing along 20 of the EU's 27-member College of Commissioners their first group visit to a major nation since their new mandate started last year.
The group will meet Prime Minister Narendra Modi and important Cabinet colleagues, such as External Affairs Minister S. Jaishankar, Commerce Minister Piyush Goyal, and Finance Minister Nirmala Sitharaman. When she arrived, von der Leyen tweeted: "In a world of wars and fierce competition, you need reliable friends. For Europe, India is such a friend and strategic partner. I'll talk to @narendramodi about how to upgrade our strategic partnership", She established the tone for her visit by highlighting India as a strategic partner in the face of fierce geopolitical rivalry.
India is likely to complain about the EU's imposition of non-tariff barriers like the Carbon Border Adjustment Mechanism (CBAM) and deforestation rules, which may have a major impact on Indian micro, small, and medium enterprises (MSMEs). Indian authorities consider CBAM to be a tax, which may result in tariffs of as much as 35 per cent on the import of high-carbon products such as cement, aluminium, fertilisers, and steel.
The EU has indicated that the elimination of trade barriers for European businesses, particularly small and medium enterprises, is one of the most important goals of the negotiations. Indian negotiators are anticipated to push for tit-for-tat steps, claiming that relaxing trade barriers for Indian MSMEs would make the agreement more balanced. This matter will be at the forefront of talks between Modi, von der Leyen, Goyal, and EU trade commissioner Maros Sefcovic, who will sit down in Mumbai on Saturday to set the stage for the 10th round of FTA talks in Brussels from March 10-14.
Hours earlier than von der Leyen's visit, Trump reaffirmed his intention to impose 25 per cent tariffs on EU imports, stating the EU was formed to empower others at America's expense. Retaliation, the EU vowed to take action 'firmly and immediately' in response to any unjustified tariffs. Apart from this animosity, the European Commission highlighted the need for deepening relationship with India, calling the relationship vital to the prosperity and security of the two regions.
The India-EU Trade and Technology Council (TTC), set up in 2022, will meet for its second ministerial on Friday. The TTC is responsible for cooperation in digital technologies, green technology, trade, and supply chains. The talks are likely to include telecommunications, 6G, artificial intelligence, and semiconductors, with Indian ministers S. Jaishankar, Piyush Goyal, and Ashwini Vaishnaw representing New Delhi. The EU has only set up such a council with India and the US, which underscores the significance of the relationship.
Cooperation in defence and security will also be highlighted, with talks on increased coordination between the Indian Navy and the navies of EU member states, joint exercises, and a mutual agreement on information security to enable Indian participation in EU-led defence initiatives. The EU will also deploy a liaison officer at the Indian Navy's Information Fusion Centre-Indian Ocean Region (IFC-IOR) in Gurugram to enhance maritime cooperation.
Von der Leyen started her visit by offering tributes to Mahatma Gandhi at Rajghat. Jaishankar, after meeting her, was hopeful and said: "Appreciate her reflections on giving a shot in the arm to India's interaction with Europe. The extensive level of engagement of Indian Ministers and EU College of Commissioners during this visit bears testament to how much we value enhanced India-EU relations".
Though the EU is likely to bring up the Russia-Ukraine dispute and trade sanctions, Indian officials have insisted that a resolution can come through diplomatic talks. India has made it clear that it respects UN sanctions and is willing to engage in talks with the EU on sanctions-related matters, including recent steps against Indian firms accused of providing sensitive technology to Russia.
The EU is India’s largest trading partner in goods, with bilateral trade exceeding $137 billion in 2023-24, alongside $51 billion in services trade. Indian exports to the EU during the same period were worth $76 billion, while EU FDI inflows to India aggregated to $117.4 billion since 2000. Though the FTA negotiations began in 2007 and stalled in 2013 as there was no commonality, negotiations began again in 2022 after the 2021 India-EU Summit. This new push, supported by top-level visits and increasing geopolitical convergence, is an indication of mutual commitment to developing a solid and lasting partnership.
The visit should further enhance strategic cooperation and place a stronger ground for future negotiations, with the two sides in hopes of reconciling differences and clinching an overall FTA. As world uncertainties escalate, the India-EU partnership is set to mature into a bedrock of stability and growth for both regions.
