The EU and India are on the verge of sealing a free trade agreement that has been nearly two decades in the making. European Council President António Costa has emphasized the deal's significance as a "geopolitical stabiliser" and the "mother of all deals," highlighting its potential to boost both economies and strengthen security. The EU-India summit scheduled for Tuesday aims to solidify the accord, with Costa and European Commission President Ursula von der Leyen attending India's Republic Day celebrations as chief guests, before the summit.
The agreement is expected to significantly increase trade between the two partners, with projections suggesting a 50% or greater increase, potentially reaching $300 billion by 2030 from the current $190 billion. Bilateral trade in goods reached €120 billion in 2024, marking an almost 90% increase over the past decade, along with €60 billion in trade in services. Both the EU and India view the pact as a crucial step in opening new markets amidst global challenges such as US tariffs and Chinese export controls.
Beyond the economic benefits, the agreement is seen as a strategic move to strengthen the EU-India partnership amidst a changing global landscape. The EU views India as a vital market, while India seeks European technology and investment to enhance its infrastructure and create jobs. Kaja Kallas, the EU's top diplomat, emphasized that the partnership comes at a critical time when the rules-based international order faces unprecedented pressure.
In addition to the FTA, a Security and Defence Partnership is also expected to be formalized. This partnership signifies a shift from a traditional buyer-seller relationship to a structured industrial collaboration, with the EU recognizing India as a potential supplier and manufacturing partner in the defense sector. This reflects confidence in India's growing industrial and technological capabilities and aims to strengthen European military capacity.
While negotiations are ongoing, some sensitive issues, like the EU's carbon border tax and agricultural concerns, remain. However, the prevailing sentiment is that the strategic importance of the agreement outweighs these challenges. The EU-India partnership is viewed as a way for both entities to coordinate more closely, especially as they navigate their relationships with the US and China. The EU-India partnership could pave the way in a multi-polar and multi-aligned world.
The EU-India FTA and the accompanying defense partnership represent a turning point in their relationship, transforming political goodwill into tangible outcomes. This enhanced cooperation in trade, defense, and innovation holds significant importance in an era of global uncertainty. The agreement is not only expected to boost economic growth but also to solidify a strategic alliance that promotes stability and security in a complex geopolitical environment.
