India and the European Union have established a deadline of the end of the year to finalize a long-awaited free trade agreement, representing their first definitive commitment to a timeline after extensive negotiations, as reported by Reuters. This decision was made public on February 28 during the visit of European Commission President Ursula von der Leyen to India, as both parties aim to mitigate the effects of potential tariff increases from the United States under the trade policies proposed by former President Donald Trump. At a joint press conference, von der Leyen and Indian Prime Minister Narendra Modi highlighted the importance of concluding negotiations that have encountered numerous obstacles. The discussions for this agreement had been stagnant for eight years before they resumed in 2021, according to Reuters. India, known for its highly protected market, has shown hesitance in reducing tariffs, while the EU has been cautious about relaxing visa restrictions for Indian professionals.Modi stated, “We have prepared a blueprint for collaboration in the areas of trade, technology, investment, innovation, green growth, security, skilling, and mobility,” and emphasized that officials have been instructed to finalize the agreement by the end of 2024.
The EU stands as India’s largest trading partner in goods, with bilateral trade surging nearly 90% over the past decade, reaching $137.5 billion in the fiscal year 2023/24. Von der Leyen urged for an “ambitious” trade and investment agreement, pointing out critical sectors for collaboration, including batteries, pharmaceuticals, semiconductors, clean hydrogen, and defense. The timing of this announcement is particularly noteworthy, considering Trump’s threats to impose reciprocal tariffs on all countries, including the EU and India, by April 2025. Von der Leyen remarked, “We both stand to lose from a world of spheres of influence and isolationism, and we both stand to gain from a world of cooperation and working together.” She further suggested that this contemporary form of great-power competition presents an opportunity for Europe and India to redefine their partnership.
