India and the European Union (EU) are expected to announce a landmark free-trade agreement (FTA) today. The deal aims to create a comprehensive framework to navigate the uncertainties caused by US policies under President Donald Trump.
Here’s a concise breakdown:
- The FTA is set to deepen bilateral ties across multiple sectors, with discussions focusing on trade, defence and security, climate change, critical technologies, and strengthening the rules-based global order.
- A defence framework pact and a strategic agenda are also expected to be unveiled, marking closer security cooperation. Europe is looking to reduce its reliance on the US and China while boosting ties with other regions.
- Prime Minister Narendra Modi will host European Commission President Ursula von der Leyen and European Council President Antonio Costa, who were also chief guests at India’s 77th Republic Day celebrations.
- Von der Leyen described the upcoming trade deal as “historic,” potentially creating a market of two billion people accounting for nearly a quarter of global GDP.
Background and significance:
- India and the EU have been strategic partners since 2004. The proposed Security and Defence Partnership (SDP) will enhance interoperability in defence and open opportunities for Indian firms under the EU’s SAFE (Security Action for Europe) programme, a €150 billion initiative to strengthen defence readiness.
- Talks for the FTA originally began in 2007 but were suspended in 2013 over differences in ambition. They were relaunched in June 2022.
- A memorandum of understanding on worker mobility is also expected, facilitating movement of Indian professionals to EU countries. France, Germany, and Italy already have such partnerships with India.
- Discussions will likely cover pressing global challenges, including the Russia-Ukraine conflict. While the two sides have differences, they share a commitment to a stable international order.
Trade context:
- The EU is India’s largest trading partner in goods. In FY 2024-25, total trade reached around $136 billion, with $76 billion in exports from India and $60 billion in imports from the EU.
