Abdelrahman
EU and India Advancing Towards Landmark Free Trade Agreement
Ursula von der Leyen, the President of the European Commission, announced that the European Union (EU) and India are actively working to establish a free trade agreement this year. Speaking in New Delhi, she acknowledged the challenges ahead but emphasized that “timing and determination matter” in making this significant deal, which could become the largest of its kind globally.
Accompanied by the entire College of Commissioners, von der Leyen’s visit marks the first of its kind since the European Parliamentary elections held in June 2024. During her trip, she had a meeting with Indian Prime Minister Narendra Modi.
In her address in the Indian capital, von der Leyen highlighted the eagerness of both parties to enhance collaboration in various sectors, including semiconductors, artificial intelligence, and cleantech. The discussions surrounding the long-anticipated free trade agreement were revived in 2021, with another negotiation round scheduled for March. Additionally, a summit between India and the EU is set to take place later this year.
Von der Leyen also underscored the importance of strengthening security and stability cooperation, exploring a potential ‘Security and Defence Partnership’ with India that mirrors existing alliances with Japan and South Korea. This move comes as Brussels seeks to bolster its presence in the Indo-Pacific region amid rising tensions between the US and Europe concerning trade tariffs and the ongoing Ukraine situation, particularly following Donald Trump’s anticipated return to the White House. Trump has indicated plans to impose a 25% tariff on goods from the EU, asserting that the bloc was established to disadvantage the US. In response, the European Union has vowed to react decisively against any unfair tariffs.
Analysts stress that, given these geopolitical shifts, fostering robust trade and security ties with India has become increasingly vital for the EU. However, reaching a trade agreement has proven challenging due to unresolved differences in areas like agriculture and manufacturing. Despite ongoing negotiations, the Observer Research Foundation (ORF), a reputable think tank, notes that there has been little progress thus far.
Nonetheless, it is worth noting that approximately 6,000 EU companies operate in India, with the EU being India’s primary trading partner in goods. Bilateral trade reached an impressive $135 billion (£107 billion) in the 2022-23 period, nearly doubling over the last decade.
After years of being cautious about free trade agreements, India is now proactively entering into negotiations with various countries and organizations. Recently, India and the UK resumed talks on a free trade agreement after nearly a year of inactivity due to elections in both nations. Last year, India successfully concluded a $100 billion free trade deal with the European Free Trade Association (EFTA), a coalition of four European countries not part of the EU, concluding 16 years of negotiations.
This collective effort indicates a commitment to building strong economic ties and fostering mutual growth in an increasingly complex global landscape.
