India and the European Union have taken a decision that can revolutionise the global trade market. Both parties undertook to finalise the free trade agreement by the end of 2023. This is the first circumstantial deadline in years of negotiations, which are temporing in the face of increasing geopolitical tensions, especially with the United States. The agreement aims not only to strengthen economical cooperation but besides to mitigate the effects of US tariff increases.
Why is this agreement so important?
The announcement of the decision took place during a joint press conference by Prime Minister Narendra Modi and the Nazis Ursula von der Leyen, who stayed on a two-day visit to India. As Prime Minister Modi stressed, a cooperation plan has already been prepared in key areas specified as trade, technology, investment, innovation, green growth, security, skills and mobility.
– "We have prepared a cooperation plan for trade, technology, investment, innovation, green growth, security, skills and mobility" said Narendra Modi.
European Union – India's most crucial trading partner
The EU remains India's largest trading partner in the goods sector. Over the last decade, trade between the 2 regions has increased by 90%, reaching $137,5 billion in fiscal year 2023/2024. Von der Leyen stressed that the fresh agreement must be ‘ambitious’ and cover a wide scope of sectors – from pharmacy to pure hydrogen and defence.
India and Europe share a strong partnership built on shared values, innovation and sustainability. Our close collaboration is sharing a better future for our planets. Together, we will work towards a prosperous world. https://t.co/6iVP4UGv69
— Narendra Modi (@narendramodi) February 28, 2025
Main points of dispute
However, negotiations are not without challenges. advanced tariffs stay the main point in dispute. The European Union demands lower rates for cars, whisky and wine, while India expects greater access to the EU marketplace for its medicines and chemicals. In addition, India is demanding lower tariffs for exports of textiles, clothing and leather products, opposed at the same time to Brussels' proposal to introduce tariffs for high-emission goods from 2026.
Geopolitical tensions and the future of the agreement
Negotiations are taking place in the context of increasing geopolitical tensions, especially in relations with the US. president Donald Trump threatened to impose reciprocal tariffs on countries, including the EU and India. As von der Leyen noted, both sides can lose much in the planet of increasing isolationism, but at the same time they can gain from cooperation.
– "Both sides can lose influence and isolation in the world, and both sides can gain cooperation and cooperation in the world. (...) However, I believe that this modern version of the rivalry of powers is besides an chance for Europe and India to re-imagin their partnership” – said the Nazis v on der Leyen.
— Ursula von der Leyen (@vonderleyen) February 28, 2025
Continued here:
Ursula on der Leyen: A free trade agreement between the EU and Mercosur will be ready by the end of the year
