Could focus on Russia derail progress on EU’s new India strategy?

Although the EU’s new strategy builds on its 2018 India strategy and the substantial progress since 2004, when India and the EU established their Strategic Partnership, the timing of the announcement is particularly significant. India’s relations with the United States are facing difficulties, positive developments are emerging in India–China ties, and negotiations on the Ukraine war are at a crucial stage. 

In an uncertain global trade environment, India and the EU have also committed to concluding their trade deal by the end of this year. They plan to hold a summit early next year and announce a new roadmap after the expiry of the current Roadmap 2025. So, the issues outlined in the strategy paper clearly point to the future direction of EU–India relations. 

New momentum in India-EU ties

Since the 13th EU-India Summit in 2016, which took place after a gap of few years, there has been a new momentum in India-EU ties. The Agenda for Action 2020 and Roadmap 2025 have been adopted. Several visits by Prime Minister Modi to European capitals, the Indo-French Rafale deal, new strategic partnerships with Italy, Greece, and Poland, India–Nordic summits, the establishment of the Connectivity Partnership, and the Trade and Technology Council (TTC) have all deepened India’s strategic engagement with the EU. 

Prime Minister Modi’s virtual meeting with all 27 EU leaders in 2021, and the recent visit of the European Commission President accompanied by more than 20 Commissioners, further underscore the importance of this partnership. This despite the fact that Indian and European perceptions about the Ukraine war differ significantly. 

The EU’s 2018 India strategy had already acknowledged India’s impressive economic growth and modernisation, its engagement with diverse partners, and its important geopolitical role. The 2025 strategy welcomes India’s rise as a global power, considers it a vital partner, and asserts that “India’s success benefits the EU, just as the EU’s success benefits India.” 

Five pillars of EU’s new India strategy

It also considers India a key stakeholder in multilateralism and global governance. While they may not align on every issue, both are pluralistic democracies committed to strategic autonomy, economic resilience, international stability, and a rules-based international order.

The strategy proposes a new EU–India strategic agenda based on five pillars:

— The first, the Prosperity and Sustainability pillar, focuses on trade, investment, and the clean energy transition. 

— The second, the Technology and Innovation pillar, supports digitisation, critical emerging technologies, and research cooperation. 

— The third, the Security and Defence pillar, aims to deepen security engagements and defence industrial cooperation. The Connectivity and Global Issues pillar emphasises effective global governance, strengthening connectivity, and promoting cooperation in third countries. 

— The fifth pillar focuses on enabling the other four by promoting mobility, skill development, and mutual understanding.

As the core of the India–EU partnership is economic, the strategy’s primary focus is on the first  and second pillars. Last year, bilateral trade in goods and services was close to $200 billion. Cumulative EU FDI inflows into India reached EUR 140 billion in 2023, with around 6,000 EU companies operating in the country. 

Similarly, Indian companies are making significant investments and acquisitions in EU markets. With considerable untapped potential, both sides aim to conclude Free Trade Agreement (FTA) negotiations by the end of 2025. They have engaged in trade and investment negotiations for years, marked by alternating phases of optimism and stalled progress. Since 2022, both sides have been negotiating three separate deals covering trade, investment, and geographical indications.

Why negotiations remain challenging

In the current phase, shifting global and Asian geopolitics, along with the weaponisation of tariffs under the Trump administration, are pushing both sides toward greater compromises to finally seal the deal. India’s recent agreements with Australia, the EFTA countries, and the UK also provide useful templates. 

Yet, negotiations remain challenging. Both the EU and India are tough bargainers, and several critical issues still need resolution. While both sides express growing optimism, caution remains, as issues related to mobility and the EU’s carbon tax could pose challenges.

The strategy outlines numerous bilateral initiatives to support the EU’s 2050 and India’s 2070 net-zero commitments, particularly in renewables and the circular economy. Cooperation is also expected in economic security, with a focus on critical minerals and the semiconductor sector. Collaboration on Digital Public Infrastructure projects, including their extension to third countries, is explicitly mentioned. 

To enhance Defence Industrial cooperation, an industry-led EU–India Defence Industry Forum is proposed. Connectivity initiatives are aligned with the EU’s Global Gateway and India’s MAHASAGAR initiative. The India–Middle East–Europe Economic Corridor (IMEC) is emerging as a flagship example of collaboration.

Russia focus risks derailing EU’s India strategy 

A significant portion of the strategy is also devoted to promoting cooperation in third countries through existing multilateral initiatives and triangular projects. It also proposes strengthening institutional mechanisms via new dialogues in areas such as agri-food policy, aviation, energy import diversification, education and skills, oceans and fisheries, and space. Currently, more than forty dialogues are already active across a wide range of areas.

The EU has been, and will remain, a key partner in India’s ambitious modernisation journey – through trade, investment, and technology. At the same time, India’s large and growing economy, with several globally competitive sectors, holds strong appeal for Europe. Despite these convergences, an excessive focus on the Ukraine war and Russia by some within the EU risks derailing promising proposals outlined in the strategy.

Recent comments by EU foreign policy chief Kaja Kallas on India’s purchase of Russian oil and its participation in military exercises have already drawn a strong reaction from New Delhi. Linking such issues to the potential trade deal could jeopardize not just the agreement itself but also many other promising initiatives contained in the otherwise well-thought-out strategy.

Post read questions

The EU’s new India strategy asserts that “India’s success benefits the EU, just as the EU’s success benefits India.” Comment.

The European Union’s new India strategy is based on five pillars. As the core of the India–EU partnership is economic, the new strategy primarily focuses on which pillars?  

India and the European Union have engaged in trade and investment negotiations for years, marked by alternating phases of optimism and stalled progress. Analyse the factors driving the two sides towards greater compromises to finally seal the deal.

Evaluate the thorny issues in the negotiations over India-EU Free Trade Agreement.

Could linking the EU’s new strategy to India’s oil purchases from Russia risk jeopardising not just the agreement but also many promising initiatives outlined in the otherwise well-thought-out strategy?

(Gulshan Sachdeva is Professor at the Centre for European Studies, Jawaharlal Nehru University and  Chief Coordinator, DAKSHIN – Global South Centre of Excellence, RIS at New Delhi.)

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