Illinois Global Review

Over the past decade (2015–2025), EU-India relations have taken a sharp turn from slow-moving trade talks to full-speed negotiations. Shifting global alliances, economic ambitions and interests, and a dose of geopolitical drama have reshaped the dynamic between Brussels and New Delhi, while the changing leadership in Washington adds another layer of urgency and uncertainty. This evolving partnership has been shaped by trade negotiations, strategic collaborations, and India’s careful balancing act between the West and Russia.

Tensions briefly flared in 2022 over India’s increased Russian oil imports and its neutral stance on the Russia-Ukraine war, frustrating many EU leaders. However, Brussels has since taken a pragmatic approach, prioritizing India’s growing role in trade and supply chains over political disagreements.

For years, EU-India relations were marked by missed opportunities and stalled trade talks, despite strong economic ties. The EU has long been one of India’s top trading partners, with bilateral trade reaching €124 billion in 2023, accounting for 12.2% of India’s total trade. However, efforts to negotiate a Free Trade Agreement (FTA), launched in 2007, were suspended in 2013, largely due to disagreements over market access, labor standards, and agriculture protections.

India’s historically high tariffs and reluctance to open its agricultural sector were key sticking points, while the EU’s strict regulatory demands frustrated New Delhi. Additionally, India traditionally focused more on individual European nations rather than the EU as a bloc, while Brussels prioritized relations with China and the U.S —keeping India at arm’s length. These factors kept the relationship transactional rather than strategic—until now.

At the center of this shift is Brussels—not just another European capital, but the beating heart of the European Union. It houses the European Commission, the European Council, and the European Parliament—the very institutions that dictate EU trade policies, foreign relations, and sanctions regimes. When Brussels signals a shift in its India policy, it’s not just about a bilateral trade deal—it’s about the entire EU recalibrating its approach to India in an era of global uncertainty.

Compounding these changes and uncertainties, Washington’s latest trade war has introduced further urgency into EU-India negotiations. On February 25, 2025, the U.S. reinstated 25% tariffs on all foreign steel and aluminum under Section 232, hitting both European and Indian exporters hard. Further tensions arose when Trump threatened across-the-board 10–20% tariffs on all imports, singling out India’s “high tariff policies”—a move that could cost Indian exporters up to $7 billion annually.

The EU vowed retaliatory measures in response to U.S. tariffs, while India began looking beyond Washington for trade partnerships. With both under pressure, the urgency to diversify trade dependencies pushed the EU-India trade deal forward.

Against this backdrop, European Commission President Ursula von der Leyen led a historic two-day visit to India on February 27–28, 2025, bringing 22 European Commissioners—the first-ever full College of Commissioners visit outside Europe. This underscored Brussels’ commitment to elevating ties with New Delhi.

The meeting with Prime Minister Narendra Modi focused on finalizing the long-delayed FTAby the end of 2025, expanding technology collaboration, and strengthening security cooperation. Leaders also launched a Green Hydrogen Partnership and explored new initiatives in semiconductors, AI, and space technology.

Security took center stage, with von der Leyen announcing an EU-India Security and Defense Partnership, marking Europe’s increasing role in the Indo-Pacific. Discussions covered counterterrorism, cyber defense, and maritime security, reflecting shared concerns over China’s assertiveness. Another major highlight was Europe’s endorsement of the India-Middle East-Europe Economic Corridor (IMEC), a G20-backed trade route linking India, the Middle East, and Europe. Von der Leyen called it “a modern golden road”, presenting it as a direct alternative to China’s Belt and Road Initiative (BRI).

A centerpiece of the summit was the second meeting of the EU-India Trade and Technology Council (TTC), first established in 2022. This forum has become a critical platform for cooperation in technology, trade, and supply chains. Three working groups were formalized during the visit:

1. Strategic Technologies, Digital Governance, and Connectivity – Focuses on AI, semiconductors, 6G, and cybersecurity. The EU and India agreed to enhance chip supply chains and align digital regulations, including interoperability in digital payments.

2. Clean and Green Technologies – Centers on renewable energy and hydrogen development. A €60 million joint fund was announced to develop battery recycling, waste-to-hydrogen projects, and sustainable EV solutions.

3. Trade, Investment, and Resilient Value Chains – Addresses supply chain security in pharmaceuticals, agri-food, and critical minerals. Both sides committed to reducing reliance on China and securing alternative sources for raw materials.

One of the most symbolic moments came when von der Leyen endorsed India’s Unified Payments Interface (UPI), calling it “a game-changer for digital transactions”, signaling Europe’s interest in India’s fintech success and digital trade expansion.

Beyond economics, geopolitical shifts are bringing India and the EU closer. Europe’s skepticism of China’s economic dominance, cyber threats, and coercive policies has grown, while India’s efforts to reduce reliance on Russian military equipment have opened the door for European defense collaboration. The EU has invited Indian firms to co-develop defense technologies, marking a significant shift in security cooperation. The two sides also agreed to expand joint naval exercises and protect undersea data cables, reinforcing Europe’s 2021 Indo-Pacific Strategy, which identifies India as a key security partner.

The February 2025 summit has set the stage for a major shift in EU-India relations, but challenges remain. The long-delayed FTA still faces hurdles, with market access disputes, tariff disagreements, and regulatory complexities yet to be resolved. Domestic opposition in India—particularly from agricultural and small-business sectors concerned about European competition—adds another layer of uncertainty, while Brussels continues to push for stricter labor rights, sustainability standards, and digital regulations.

With U.S. trade policies uncertain and China’s influence expanding, Europe and India are no longer just economic allies—they are emerging as geopolitical partners shaping the future of global trade, security, and technology. However, challenges remain—from stalled FTA negotiations over market access and labor standards to domestic opposition in India against opening key sectors to European competition. As both sides navigate these roadblocks, the real test will be whether political will can turn ambition into action.