NEW DELHI — In a significant development, India and the European Union are set to finalize a long-awaited free trade agreement within this year, enhancing collaboration in a range of areas including trade, technology, connectivity, and defense. This announcement followed a meeting between Indian Prime Minister Narendra Modi and European Commission President Ursula von der Leyen.
Prime Minister Modi revealed that both parties have instructed their respective teams to facilitate the completion of this bilateral free trade agreement by the end of the current year. Highlighting the progress made during their discussions, Modi stated, “Numerous decisions were made to elevate and accelerate the India-EU partnership.”
Modi emphasized the inherent strategic alliance between India and the EU, underscoring the foundation built on mutual trust and shared democratic values. He remarked, “The strategic partnership between India and the EU is truly a natural one.”
European Commission President von der Leyen highlighted the significance of the proposed free trade deal, describing it as potentially the largest agreement of its kind globally. Her comments come as Brussels intensifies efforts to conclude the deal with New Delhi amidst looming U.S. tariff threats. U.S. President Donald Trump had announced potential 25% tariffs on EU-produced goods.
In her remarks before meeting Modi, von der Leyen urged a pragmatic yet ambitious approach, stating, “It’s essential to realign our priorities according to today’s realities. You can count on my complete dedication to ensure we achieve this.”
The European Commission President is on a two-day visit to India, joined by senior leaders from EU member states. India and the EU had revived negotiations for this bilateral agreement back in 2021, though challenges such as market access for automobiles and alcoholic beverages remain.
Discussions for the next round of negotiations are scheduled for March. Besides trade, India and the EU collaborate extensively across foreign policy, security, and technological arenas. The EU holds the status of India’s largest trading partner, surpassing both the U.S. and China.
In the fiscal year 2023-24, trade between India and the European bloc reached over $130 billion, reflecting a 90% growth from a decade ago. Additionally, over 6,000 European enterprises operate within India.
Von der Leyen expressed optimism about the burgeoning partnership, stating, “The EU and India can form one of this century’s defining partnerships.” Her visit aims to mark the beginning of this new era in EU-India relations.
India is attaching increased importance to these trade discussions, particularly in light of former President Trump’s decision to impose reciprocal tariffs on goods imported from India and other nations.
In a strategic move last year, India signed a trade agreement with members of the European Free Trade Association, including Iceland, Liechtenstein, Norway, and Switzerland, committing to investments amounting to $100 billion. These investments are earmarked for sectors such as pharmaceuticals, machinery, and manufacturing.
