India, EU Press The Pedal On Free Trade Agreement As Trump’s Tariffs Intensify
In an unprecedented move, India and the European Union (EU) have set a deadline to finish the talks for having the decades-old proposed trade pact by the end of this year.
Ursula von der Leyen In India: For the first time in past several years, India and the European Union (EU) set a deadline to conclude negotiations for readying the decades-old pending free trade agreement (FTA) between the two sides. In a bilateral meeting in New Delhi on Friday between Prime Minister Narendra Modi and President of the European Commission Ursula von der Leyen both sides agreed to conclude the FTA by the end of 2025.
This comes at a time when Europe has come under intense pressure from the United States under President Donald Trump over the ongoing Russia-Ukraine war and his administration’s focus on reciprocal trade tariffs.
“We have tasked our teams to build on this momentum and finalise our Free Trade Agreement before the end of this year. We are expecting a lot of our trade negotiators, we told them they should surprise us. Now more than ever, the geopolitical context asks for decisive action,” von der Leyen said at a joint press conference after her meeting with Modi.
Von der Leyen, who previously visited India in September 2023 and April 2022, also said the European Union and India have agreed to have the FTA by the end of this year.
However, the EU’s insistence on a substantial tariff reduction by India on European cars, auto parts, wines and whiskey can once again stall the talks, even as sensitivities on both sides concerning market access in agricultural goods can prove to be sticky points in the talks.
“We have directed our teams to conclude a mutually beneficial Bilateral Free Trade Agreement by the end of this year. To strengthen the investment framework, there has also been talk of moving forward on Investment Protection and GI Agreement. In the field of Technology and Innovation, a trusted and secure value chain is our common priority,” said PM Modi in his remarks to the media.
He added, “We have also agreed on increasing cooperation in semiconductors, AI, high performance computing and 6G. We have also decided to initiate a Space Dialogue.”
Tanmaya Lal, Secretary (West), Ministry of External Affairs called the setting of the deadline for the FTA as a “major outcome” out of the visit in which the EC Chief is being accompanied by 21 EU Commissioners.
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“There is a clear direction now, a decisive and new mandate has been given, which is always good for trade negotiators,” he added.
According to the Leader’s Statement issued after the meeting, both von der Leyen and Modi “stressed the importance of intensifying cooperation between India and Europe in trade and de-risking of supply chains, investment, emerging critical technologies, innovation, talent, digital and green industrial transition, space and geospatial sectors, defence and people-to-people contacts.”
However, the EU has also made it clear that there will be “no FTA” without India agreeing to cut tariffs on European cars, wines and spirits. These were very same issues that were responsible for the trade agreement hitting a deadlock in 2013, under the previous UPA-led government.
The EU also wants India to fasten the process of signing two additional agreements on investment protection and geographical indications.
India, EU Looking To Diversify Military Supplies
In the bilateral meeting that was held Friday at the capital’s Hyderabad House, both leaders also sought to enhance defence and security ties.
The EC Chief, during her remarks to the press said, both India and Europe have decided to diversify their military supplies even as they will be seeking access to “new capabilities.
“So, both India and the European Union can be partners on this topic,” she said. Earlier in the day while delivering a speech at a private event, the EC President said, both sides are exploring a future Security and Defence Partnership in line with what the EU has with countries such Japan and South Korea.
“The two leaders expressed satisfaction at growing cooperation in the defence and security domain, including joint exercises and collaboration between Indian Navy and EU Maritime security entities. The EU side welcomed India’s interest in joining the projects under the EU’s Permanent Structured Cooperation (PESCO) as well as to engage in negotiations for a Security of Information Agreement (SoIA),” the joint statement said.
It added, “The leaders also committed to explore a security and defence partnership. They reiterated their commitment to international peace and security, including maritime security by tackling traditional and non-traditional threats to safeguard trade & sea lanes of communication.”
Both leaders also decided to deepen their collaboration in counter-terrorism and to strengthen international cooperation to combat terrorism, including cross-border terrorism and terrorism financing.
The joint statement also highlighted the ongoing war in Ukraine, but Russia was not mentioned.
“The leaders also committed to explore a security and defence partnership. They reiterated their commitment to international peace and security, including maritime security by tackling traditional and non-traditional threats to safeguard trade & sea lanes of communication. They emphasised the need to deepen collaboration in counter terrorism and to strengthen international cooperation to combat terrorism, including cross-border terrorism and terrorism financing in a comprehensive and sustained manner,” the readout said.
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