UPSC Issue at a Glance | India and EU seal the deal: Trade, Mobility, Security—and major takeaways

Firming up 13 outcomes at 16th India-EU summit meeting in New Delhi, the two sides not only concluded negotiations on the FTA, but also signed a security and defence partnership, a mobility framework, and a joint India–European Union Comprehensive Strategic Agenda for 2026–2030. In this context, it becomes essential to know about India-EU relations and recent developments from a broader perspective. 

(Relevance: UPSC Syllabus Mains Examination: General Studies-II, III: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests, Effects of liberalisation on the economy.)

Question 1: What is the history of India-European Union relations?

The European Union is a group of 27 countries in Europe. The relationship between India and the EU is based on shared values and principles such as democracy, rule of law, rules based international order and multilateralism. The ties are multifaceted and cover a broad spectrum of topics including trade, investment, climate change, science and technology, digital, connectivity and agriculture. 

Member countries of European Union. (Image: Official website of the EU)

India-EU bilateral relations date back to the early 1960s with India being amongst the first countries to establish diplomatic relations with the European Economic Community— the first pillar of the future European Union — back in 1962. The Joint Political Statement was signed in 1993 and the Cooperation Agreement of 1994 paved the way for the strengthening of ties between India and Europe. А multi-tiered institutional architecture of cooperation has since been created, presided over by the India-EU Summit since 2000. 

The first India-EU Summit took place in June 2000 in Lisbon. The relationship was upgraded to a ‘Strategic Partnership’ during the 5th India-EU Summit held in 2004 in The Hague. Recently, the 16th Summit took place in Delhi. 

Question 2: What are the key takeaways of 16th India-European Union Summit ?

Firming up 13 outcomes at their summit meeting in New Delhi, India and the EU signed off on the conclusion of the FTA negotiations, a security and defence partnership, a mobility framework, and the joint India–European Union Comprehensive Strategic Agenda 2026–2030. Here are the key highlights from the 16th India-EU Summit.

📍India-EU Free Trade Agreement

After nearly two decades of talks, India and EU formally completed the negotiations on the much-awaited FTA. The formal signing of the agreement would take place later this year after legal scrubbing of the agreement is completed.

As The Indian Express explained earlier, the first round of India-EU trade talks was initiated in 2007. By October 2013, New Delhi and Brussels had exchanged offers on tariffs and services, and were focusing on identifying the outlines of a possible agreement for the tricky market-access component of the FTA.

The recent deal attempts to be far more pragmatic. It takes a graded approach to contentious issues such as automobiles and spirits, and has left out agriculture products altogether. For India, zero duty on labour-intensive goods brings it at par with competing countries, particularly with Vietnam, which signed a trade agreement with the EU in 2019, which helped it assume a key role in the global supply chain.

Commerce Ministry officials said that tariffs in the European Union are expected to go down to zero for labour-intensive goods, including marine sector that currently face up to 26%, leather and footwear up to 17%, chemical up to 12.8%, plastic and rubber up to 6.5%, textile and apparel up to 12%, gems and jewellery up to 4%, toys up to 4.7% and sports goods up to 4.7%.

The EU, in a statement, said that duty on European motor vehicles has been reduced from 110% to 10% and the quota has been set at 250,000 units. The quotas on Electric Vehicles (EVs) will only come into effect in the fifth year, as Indian EV manufacturing is growing.

The EU said that tariffs on wine under the trade deal have been reduced from 150% to 20% for the premium range and 30% for the medium range. For spirits, the duty for the EU has been reduced from up to 150% to 40%, and for beer from 110% to 50%.

(Image credit: Notebooklm)

📍India‑EU Comprehensive Framework of Cooperation on Mobility

Both countries have also signed a mobility pact aimed at easing the movement of Indian students, workers and professionals across 27 EU member countries. The pact comes at a time when the US is making H1-B and other visa routes for Indian citizens more expensive, stricter.

Under the new framework for mobility, the EU has committed to “an uncapped mobility for Indian students”, according to officials, allowing Indians greater ease to travel, study and work across EU states. There are already around 1.20 lakh Indian students across the EU, with Germany clocking in around 50,000, making Indian students the largest group of international students in the country.

The joint statement said that the leaders highlighted that education and people‑to‑people ties have emerged as vital enablers of the India‑EU Strategic Partnership. They welcomed the conclusion of the India‑EU Comprehensive Framework of Cooperation on Mobility. They also commended the launch of the first pilot European Legal Gateway Office, as a one‑stop hub to provide information and support the movement of workers, starting with the ICT sector.

Notably, the Comprehensive Framework on Cooperation on Mobility, was signed by Maros Sefcovic, European Commissioner for Trade and Economic Security, and External Affairs Minister S Jaishankar, in the presence of Prime Minister Modi, European Commission President Ursula von der Leyen and European Council President Antonio da Costa, at the 16th India-EU Summit in New Delhi Tuesday (January 27). 

New Delhi, Jan 27 (ANI): Prime Minister Narendra Modi, European Commission President Ursula von der Leyen and European Council President António Costa witness the exchange of an MoU during the joint Press Statement, at Hyderabad House in New Delhi on Tuesday. External Affairs Minister S. Jaishankar also present. (ANI Photo)

Besides students and workers, the pact also opens the door for Indian researchers, being seen as a gateway for Indian talent to contribute to emerging technological fields, including artificial intelligence.

📍Towards 2030: India–EU Joint Comprehensive Strategic Agenda

PM Narendra Modi and the visiting European Commission President Ursula von der Leyen and European Council’s President Antonio Costa adopted “Towards 2030: India–EU Joint Comprehensive Strategic Agenda” to elevate strategic cooperation between the two sides.

The Joint Comprehensive Strategic Agenda is aimed at accelerating progress across five key pillars: prosperity and sustainability, technology and innovation, security and defence, connectivity and global challenges, as well as enabling factors such as skills, mobility, business and people-to-people ties.

In the current geopolitical environment and amidst global disruptions, they reaffirmed the India-EU Trade and Technology Council (TTC), a high level coordination platform to address key trade, technology and economic security issues, as the cornerstone of their technology partnership and aim to further enhance its work.”

📍India-EU Security and Defence Partnership

India and the European Union also signed the India-EU Security and Defence Partnership, the first such overarching defence and security fra­mework between the two sides that will deepen ties in ma­r­itime security, defence industry and technology, cyber and hybrid threats, space and cou­nter terrorism, among others.

The two sides also welcomed the launch of negotiations on a Security of Information Agreement to facilitate exchange of classified information and pave the way for stronger cooperation in security and defence. The two sides called for decisive and concerted international efforts to combat terrorism in a comprehensive and sustained manner and in accordance with international law.

Question 3: What is the significance of the recent India–EU agreements?

The recent agreements across various sectors between India and the EU hold multifaceted significance. For instance, the India-EU trade agreement—one of the most comprehensive deals India has ever signed—could benefit the country’s labour-intensive sectors, ranging from marine products and textiles to footwear and sports goods.

States are also expected to benefit from the deal as the gains will be broad-based and cluster-led, benefiting manufacturing and services hubs across multiple states, especially those having large numbers of MSMEs and labour-intensive value chains. 

States such as Maharashtra, Gujarat, Tamil Nadu, West Bengal, Assam, Kerala, Karnataka, Andhra Pradesh, Telangana, Punjab, Rajasthan and Uttar Pradesh are expected to gain due to the presence of textiles clusters and MSMEs dealing in engineering goods, leather and footwear, diamonds and jewellery, electronic goods and pharmaceuticals.

The India‑EU Comprehensive Framework of Cooperation on Mobility is expected to benefit the Indian workforce, as Europe has a problem of a shrinking workforce, with projections saying that the working-age population will fall by six million between 2025 and 2030. The Comprehensive Framework on Cooperation on Mobility will make pathways portable for Indian engineers, care workers and nurses, hospitality staff, and drivers.

Question 4: What are the challenges in implementing the India–EU Free Trade Agreement?

From food and chemicals to engineering goods, the EU has implemented a wide net of strict regulations that tend to discourage exporters due to the steep compliance burden and present a challenge for India. 

Anil Sasi of The Indian Express writes- “The EU has a plethora of regulations, which has been a problem for developing countries such as India. The Carbon Border Adjustment Mechanism (CBAM) — the world’s first carbon tax — is among them. The 27-nation bloc began implementing it starting January 1.

In its current form, CBAM would apply a carbon-related charge to the import of goods from the power sector and energy-intensive industrial sectors, such as cement, steel, aluminium, oil refinery, paper, glass, chemical and fertilisers from countries with lower environmental ambitions and regulations than the EU. Then there is the EU Deforestation Regulation (EUDR), aimed at preventing products sold in the EU from being sourced from deforested land. The regulation is likely to kick in from December 2026.”

Experts have pointed out that India currently does not have compliance standards in place, and the EUDR could pose challenges in exports of food products as the regulation requires extensive compliance procedures, including supplier details as well as addresses of production. Much of the cultivation in India happens by smallholder farmers, making traceability challenging.

According to Delhi-based think tank GTRI, the EUDR is expected to affect India’s agricultural exports to the EU, valued at $1.3 billion, more severely than exports from competing countries due to India’s higher deforestation rate. Unlike quality standards, where only the final product’s quality matters, the EU’s regulations impose complex compliance mechanisms, seemingly designed to increase the cost of imports and protect local producers.

(Image credit: Notebooklm)

The problem for India is that its shipments must be protected from these excessive regulations that are difficult to comply with by the country’s Small and Medium-sized Enterprises (SMEs), which account for nearly 40% of India’s exports.

From the EU’s perspective, a bugbear on the Indian side is the bevy of so-called quality control orders (QCOs) that India has developed as a system of mandatory standards that require certification following audits of manufacturing facilities. That is a non-tariff barrier that the EU has stridently opposed. Most products subject to QCOs, according to a negotiator from Brussels, are not subject to mandatory third-party certification in Europe and these QCOs have been flagged as “a major obstacle for marketing products” in India. 

To tackle problems such as the QCOs, the EU side has proposed a sort of a ‘rapid response forum’ that can take up these sorts of problems to the top level as quickly as possible, whenever either side sees some barriers to trade. That is being seen as an institutional arrangement, which could address these issues.

The India-EU FTA provides the opportunity to tackle these challenges through better execution of it as C. Raja Mohan writes- “India’s partnership with Europe stands at a turning point. The challenge now is to move from breakthroughs to delivery and from frameworks to outcomes. For India and Europe alike, this is a moment not just to diversify partnerships but to expand their agency in shaping the emerging international order.”

Post Read Questions

Prelims

(1) Consider the following statements:

1. The European Union is India’s largest trading partner in goods.

2. The European Union is a group of 27 countries in Europe.

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

(2) Consider the following statements: (UPSC CSE 2023)

The ‘Stability and Growth Pact’ of the European Union is a treaty that:

1. limits the levels of the budgetary deficit of the countries of the European Union

2. makes the countries of the European Union to share their infrastructure facilities

3. enables the countries of the European Union to share their technologies

How many of the above statements are correct

(a) Only one

(b) Only two

(c) All three

(d) None

Mains

The expansion and strengthening of NATO and a stronger US-Europe strategic partnership works well for India. What is your opinion about this statement? Give reasons and examples to support your answer. ( UPSC CSE 2023)

PRELIMS ANSWER KEY

1. (c)   2. (a)

(Source: indianembassybrussels.gov.in, India-EU FTA: Who gains what, what’s next?,  India-EU mobility pact eases options for Indian students, workers, The India–EU deal’s big swap, India–EU Joint Comprehensive Strategic Agenda, India, EU sign security, defence pacts, condemn terror in all forms, After two decades of negotiations, how India and EU finally clinched a trade deal this time)

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