Investments, trade, and diplomacy: The EU bets on India

Tanjore Big Temple (Brihadeshwara Tempel) in Tamil Nadu, oudste en hoogste tempel in India. Credits: Pexels, Pravin Kannah Photography The European Commission made an official visit to India on February 27–28, marking a new step in strengthening diplomatic and trade relations between the two powers. This visit, which brought together more than twenty European commissioners, aimed to revive a "strategic partnership" between the EU and India, focusing on three key areas: trade, technology, and the Ukraine crisis. A Free Trade Agreement on the horizon According to Mediapart, discussions resulted in a mutual commitment to "achieve a free trade agreement by the end of 2025." This initiative aligns with the EU's broader strategy to diversify its trade partnerships as tensions persist with both the United States and China. In 2024, bilateral trade between the EU and India reached 120 billion euros, making the EU India's largest trading partner, accounting for over 12 percent of its external trade, according to Brussels. However, obstacles remain. A senior European official, quoted by Euronews, described the Indian market as "relatively closed," particularly for key EU export interests such as automobiles, wine, and spirits. India imposes high tariffs on these products, posing a major challenge in the negotiations. Technology at the core of the dialogue Beyond trade, technology is a crucial area of strategic cooperation. After resuming talks in 2022, the EU and India established a Trade and Technology Council in 2023. During this visit, the council convened for the second time to strengthen collaboration in critical sectors, including artificial intelligence (AI), quantum computing, electric vehicle batteries, and semiconductor manufacturing. India, which is set to host an AI summit in six months, could benefit from European cooperation to catch up with China, according to Anunita Chandrasekar, an expert at the Centre for European Reform. Additionally, ongoing tensions between India and China—exemplified by India's 2020 ban on TikTok—could push India to deepen its technological ties with the EU. India and the Ukraine crisis Ukraine was also a key topic in discussions between Indian Prime Minister Narendra Modi and European Commission President Ursula von der Leyen. Brussels seeks to rally India to Ukraine's cause, as European leaders remain excluded from U.S.-Russia peace negotiations. However, India has maintained a neutral stance, as reflected in its abstention from a recent UN vote condemning Russia’s aggression. The EU is also keen to ensure that India enforces sanctions against Russia. In November 2023, Brussels sanctioned several Indian companies for circumventing these measures, highlighting the significance of this issue in bilateral relations. The India-Europe corridor: a strategic link Another key point of discussion during the EU-India summit was the India-Middle East-Europe Corridor (IMEEC). As confirmed by Indian Prime Minister Narendra Modi, detailed talks were held with European leaders on this ambitious infrastructure initiative. The corridor, already under development, aims to connect India to Europe via the Middle East (West Asia) through a combination of sea, rail, and road links. PM Modi expressed confidence that the IMEEC would serve as a catalyst for global trade, sustainable growth, and economic prosperity, as reported by NDTV. This project aligns with the EU’s Global Gateway initiative, which seeks to develop secure and sustainable infrastructure worldwide, positioning India as a central player in global supply chains while offering Europe an alternative trade route amid shifting geopolitical dynamics. Global Gateway: an investment lever EU investments in India are effectively also part of the Global Gateway program, a European initiative aimed at developing smart, clean, and secure infrastructure in digital, energy, and transport sectors. Between 2021 and 2027, Team Europe will mobilise up to 300 billion euros to finance sustainable, high-quality projects while adhering to strict environmental and social standards. According to Le Figaro, India often criticises the EU’s stringent regulations, particularly in environmental matters, which have caused friction—such as during the adoption of the EU’s deforestation regulation. A long road ahead for negotiations Despite a clear willingness to move forward, EU-India negotiations remain complex. As The Financial Times points out, trade talks initially began in 2007 before being stalled for nearly a decade. Key remaining obstacles include differences over intellectual property protection and EU environmental requirements, which India often views as excessive. Despite these challenges, both India and the EU appear determined to deepen their partnership amid a shifting geopolitical landscape where traditional alliances are being redefined. SummaryThe EU and India aim to finalize a free trade agreement by the end of 2025, boosting bilateral tra

Mar 4, 2025 - 09:47

Investments, trade, and diplomacy: The EU bets on India

Tanjore Big Temple (Brihadeshwara Tempel) in Tamil Nadu, oudste en hoogste tempel in India. *Credits: Pexels, Pravin Kannah Photography*

The European Commission made an official visit to India on February 27–28, marking a new step in strengthening diplomatic and trade relations between the two powers. This visit, which brought together more than twenty European commissioners, aimed to revive a "strategic partnership" between the EU and India, focusing on three key areas: trade, technology, and the Ukraine crisis.

A Free Trade Agreement on the horizon

According to Mediapart, discussions resulted in a mutual commitment to "achieve a free trade agreement by the end of 2025." This initiative aligns with the EU's broader strategy to diversify its trade partnerships as tensions persist with both the United States and China. In 2024, bilateral trade between the EU and India reached 120 billion euros, making the EU India's largest trading partner, accounting for over 12 percent of its external trade, according to Brussels.

However, obstacles remain. A senior European official, quoted by Euronews, described the Indian market as "relatively closed," particularly for key EU export interests such as automobiles, wine, and spirits. India imposes high tariffs on these products, posing a major challenge in the negotiations.

Technology at the core of the dialogue

Beyond trade, technology is a crucial area of strategic cooperation. After resuming talks in 2022, the EU and India established a Trade and Technology Council in 2023. During this visit, the council convened for the second time to strengthen collaboration in critical sectors, including artificial intelligence (AI), quantum computing, electric vehicle batteries, and semiconductor manufacturing.

India, which is set to host an AI summit in six months, could benefit from European cooperation to catch up with China, according to Anunita Chandrasekar, an expert at the Centre for European Reform. Additionally, ongoing tensions between India and China—exemplified by India's 2020 ban on TikTok—could push India to deepen its technological ties with the EU.

India and the Ukraine crisis

Ukraine was also a key topic in discussions between Indian Prime Minister Narendra Modi and European Commission President Ursula von der Leyen. Brussels seeks to rally India to Ukraine's cause, as European leaders remain excluded from U.S.-Russia peace negotiations. However, India has maintained a neutral stance, as reflected in its abstention from a recent UN vote condemning Russia’s aggression.

The EU is also keen to ensure that India enforces sanctions against Russia. In November 2023, Brussels sanctioned several Indian companies for circumventing these measures, highlighting the significance of this issue in bilateral relations.

The India-Europe corridor: a strategic link

Another key point of discussion during the EU-India summit was the India-Middle East-Europe Corridor (IMEEC). As confirmed by Indian Prime Minister Narendra Modi, detailed talks were held with European leaders on this ambitious infrastructure initiative.

The corridor, already under development, aims to connect India to Europe via the Middle East (West Asia) through a combination of sea, rail, and road links. PM Modi expressed confidence that the IMEEC would serve as a catalyst for global trade, sustainable growth, and economic prosperity, as reported by NDTV.

This project aligns with the EU’s Global Gateway initiative, which seeks to develop secure and sustainable infrastructure worldwide, positioning India as a central player in global supply chains while offering Europe an alternative trade route amid shifting geopolitical dynamics.

Global Gateway: an investment lever

EU investments in India are effectively also part of the Global Gateway program, a European initiative aimed at developing smart, clean, and secure infrastructure in digital, energy, and transport sectors. Between 2021 and 2027, Team Europe will mobilise up to 300 billion euros to finance sustainable, high-quality projects while adhering to strict environmental and social standards.

According to Le Figaro, India often criticises the EU’s stringent regulations, particularly in environmental matters, which have caused friction—such as during the adoption of the EU’s deforestation regulation.

A long road ahead for negotiations

Despite a clear willingness to move forward, EU-India negotiations remain complex. As The Financial Times points out, trade talks initially began in 2007 before being stalled for nearly a decade. Key remaining obstacles include differences over intellectual property protection and EU environmental requirements, which India often views as excessive.

Despite these challenges, both India and the EU appear determined to deepen their partnership amid a shifting geopolitical landscape where traditional alliances are being redefined.