At a time when both India and the European Union brace to face reciprocal tariffs from the US and the trans-Atlantic relationship is strained like never before, Prime Minister Narendra Modi and visiting President of the European Commission Ursula von der Leyen tasked their negotiators to conclude the India-EU Free Trade Agreement by end of 2025.
This comes as world leaders scramble to diversify exports to mitigate the impact of likely US tariffs announced by President Donald Trump. While Trump has signalled no relief for India on tariffs, he has announced plans to impose 25 per cent tariffs on the EU.
This was the backdrop against which Modi and von der Leyen underlined the significance of the India-EU partnership.
Calling the engagement “historic and unparalleled…natural and organic”, Modi said that it was built on shared values aimed at “shaping a better future for our planet”. Von der Leyen flagged what was at stake. Calling the world “fraught with danger”, at an “inflection point in history”, she said that the “modern version of great power competition is an opportunity for Europe and India to reimagine their partnership…(because both) are uniquely placed to respond to this challenge together”.
Placing trade in this context, she said: “A free trade agreement between the EU and India would be the largest deal of this kind anywhere in the world. I am well aware it will not be easy. But I also know that timing and determination counts, and that this partnership comes at the right moment for both of us. This is why we have agreed with Prime Minister Modi to push to get it done during this year. And you can count on my full commitment to make sure we can deliver.”
This was echoed in the leaders’ statement framed as a joint communique calling for a “balanced, ambitious, and mutually beneficial FTA with the aim of concluding them within the course of the year”.
Acknowledging the significance of growing India-EU trade and economic relations, it said: “The leaders asked the officials to work as trusted partners to enhance market access and remove trade barriers. They also tasked them to advance negotiations on an Agreement on Investment Protection and an Agreement on Geographical Indications.”
After the bilateral meeting in Hyderabad House, Modi said that the strategic relationship with the EU is crucial, with as many as 20 ministerial-level meetings across different sectors taking place over the past two days to prepare a blueprint for collaboration in trade, technology, investment, and security.
“We have directed our teams to conclude a mutually beneficial bilateral free trade agreement by the end of this year,” Modi said.
Negotiations for FTA began in 2007, and stalled some years ago, and were relaunched in 2021.
This is the first time that there is a deadline to conclude the FTA, similar to a deadline set for the Indo-US trade deal to be concluded by Fall this year — that was agreed during Modi’s meeting with Trump in the White House early this month.
After her meeting with Modi, von der Leyen spoke on the scope of the agreement: “The potential is immense. Europe is already India’s biggest trading partner. Last year alone, we exchanged EUR 120 billion worth of goods. And over the past two decades, our trade has tripled. All this is proof that our businesses and people want to work together. One of the best examples of this partnership is the new Federation of European Businesses in India. It brings together 6,000 EU companies, which have created 8 million direct and indirect jobs in this economy. 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.”
Ukraine, too, figured in the discussions, amid von der Leyen’s call — while speaking at an event — for renewed cooperation on security and stability during which she announced that Europe would “step up” its defence expenditure, a point that the US has long underlined.
In her address earlier in the day, she said that even if “we sit far apart on the map”, India and Europe were affected by conflict anywhere “because peace, security and prosperity are indivisible in this world”.
On the war, she sharply drew the European line: “In Europe, Russia’s goal is to tear Ukraine apart… A failed Ukraine would not only weaken Europe. And that is why we have taken historic steps to support Ukraine and its future. But a failed Ukraine would also intensify the challenges in other parts of the world. Not least in this region. Other countries around the world are watching very closely whether there is any impunity if you invade a neighbour or violate international borders. Or whether there are real deterrents. This is why we want any peace talks to lead to a just and lasting peace. With a free and prosperous Ukraine, that can join the European family. And Europe is ready to live up to its responsibility…We will step up our defence spending to ensure that Member States have access to the full spectrum of capabilities that this new reality demands. But we also want to step up cooperation with crucial partners like India.”
Her reference to violating borders was also seen as one to Beijing’s aggressive behaviour in the Indo-Pacific region.
“This is why I can announce that we are exploring a future Security and Defence Partnership with India in the mould of the partnerships we have with Japan and South Korea. This will help us step up our work to counter common threats whether on cross-border terrorism, maritime security threats, cyber-attacks or the new phenomenon we see: attacks on our critical infrastructure.”
After the meeting, Modi flagged tech cooperation: “We have also agreed on increasing cooperation in semiconductors, AI, high performance computing and 6G. We have also decided to initiate a Space Dialogue.”
Modi and von der Leyen talked about connectivity between the two regions with the Prime Minister referring to “concrete steps” that will be taken to take forward the India-Middle East-Europe Economic Corridor or IMEEC. “I firmly believe that IMEEC shall serve as an engine that drives global commerce, sustainable growth and prosperity in the days to come,” he said.
Earlier, von der Leyen also framed this “historic… amazing” project as one that “can be a modern golden road” directly connecting India, the Arabian Gulf and Europe. “With a rail link, that will make trade between India and Europe 40% faster. With an electricity cable and a clean hydrogen pipeline. And a high-speed data cable to link some of the most innovative digital ecosystems in the world. This corridor is much more than ‘just’ a railway or a cable. It is a green and digital bridge across continents and civilisations…This can be a win-win-win for Europe, India and our partners. We are ready to invest in concrete projects that can already start making these connections happen. Europe is open for business, and we are ready to invest in our common future with India.”
Modi met the high-level delegation of the European Union (EU) College of Commissioners, led by von der Leyen. Of the 27 EU Commissioners, 22 are visiting India. Cabinet ministers including External Affairs minister S Jaishankar, Commerce Minister Piyush Goyal, Railways and Information and Broadcasting minister Ashwani Vaishnaw attended the meeting.
This is the first ever visit of the EU College of Commissioners together to India and the first visit outside of Europe by the new College that took office in December 2024.
On both sides, the task is cut out. An EU official, speaking on condition of anonymity, said that a key aspect of the trade deal could hinge around India’s commitment to lowering duties on cars amid an ongoing crisis in the European automobile sector. On the Trade and Technology Council (TTC) meeting Friday, the official said that semiconductors were highlighted as an area requiring deeper and more focused discussions.
Prime Minister Narendra Modi with European Commission President Ursula von der Leyen in New Delhi, Friday. (Photo: Renuka Puri) 
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