The European Union and India are in the final stages of negotiating a Free Trade Agreement (FTA), with the European Commission aiming for a conclusion by the end of 2025. This trade agreement will significantly boost economic relations, expand market access, and strengthen cooperation in fields of defence, technology, trade and sustainability.
However, India’s close partnership with Russia — particularly in energy and defence — has raised concerns in Brussels before the closing of the potential agreement. With India’s rising imports of Russian crude oil, the strategic partnership may face challenges and geopolitical hurdles before the FTA is finalized.
The European Union recently proposed a new strategic agenda to strengthen its bilateral relations with India. The ‘New Strategic EU-India Agenda’ serves as a significant milestone outlining shared agendas and long-term cooperation. This agreement is also expected to strengthen the joint economic security between both the partners.
European Commission President Ursula von der Leyen highlighted the EU’s commitment to deepening its trade and economic partnership with India and to finalizing a Free Trade Agreement (FTA) by the end of this year. This landmark deal is expected to boost trade, drive innovation and foster collaboration while promoting common interests and values.
Geopolitical hurdles may tip the balance in finalizing the agreement. Brussels expressed concerns over New Delhi’s energy and defence ties with Russia, which could influence the trade negotiations. The EU has opposed Russia’s role amid the Russia–Ukraine war. The 27-nation EU has already banned most imports of Russian oil after the Kremlin's 2022 invasion of Ukraine. European Commission President Ursula von der Leyen discussed the European Commission’s commitment to phase out all Russian oil and gas imports by the end of 2027 with American President Donald Trump in a recent telephonic conversation.
Hence, India’s strong ties with Russia may pose a challenge before the potential FTA is finalized.
The EU considers India a key diplomatic partner in the Asia region. The India-EU Free Trade Agreement will boost air transport, collaboration on securing supply chains, green hydrogen, decarbonisation of heavy industry, and research and innovation.
The two sides could also establish a defence and security partnership, as the EU already has with Japan and South Korea.
“As we enter into more and more engagements with the developed world, as we finalise the India-EU free trade agreement which is going to be a comprehensive economic partnership, with strategic elements into this partnership in the months to come, I’m sure India will grow”, Piyush Goyal (Commerce Minister) said at the 65th Annual Session of the Automotive Components Manufacturers Association (ACMA) in New Delhi.
The defence and security sector could witness significant growth with the India-EU Free Trade Agreement (FTA). Both partners have agreed to make concessions to strengthen bilateral security and defence industry interests.
In the technology sector, this could push innovation in AI, semiconductors, and space technology. This deal will enable cooperation across categories. The shared interest is to expand skills mobility including in the digital sector while promoting mutual understanding through educational exchanges and cultural diplomacy with EU-India business forums.
Overall, this Free Trade Agreement could take India-EU relations to new heights as India has shared its commitment for sustainability, growth, and innovation.
(Rh/RS/NS)
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