India and EU to finalise free trade agreement by year-end

TDT | New Delhi
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India will finalise a “mutually beneficial” free trade deal with the European Union by the end of this year, Prime Minister Narendra Modi said yesterday after meeting with EU chief Ursula von der Leyen.

“We have asked our teams to work out a mutually beneficial bilateral free trade agreement by the end of this year,” Modi said in New Delhi. Von der Leyen, who is on a two-day visit to India with her college of commissioners, is seeking to hedge against souring relations with the United States and said they were “expecting a lot from our trade negotiators.”

Deeper access to India’s rapidly expanding market was at the top of the delegation’s agenda, and the EU chief looked visibly pleased after her meeting with Modi and his ministers. The EU is already India’s largest trading partner, accounting for 124 billion euros ($130 billion) worth of trade in goods in 2023, making up more than 12% of total Indian trade, according to Brussels.

India hopes to gain from coordinated efforts towards building resilient supply chains by wooing businesses looking to move out of China, offering tax breaks, simplified investment laws, better infrastructure, and access to its massive domestic market. The country’s rapidly growing economy is looking to strengthen trade ties with Europe to bolster its development.

The European Commission President, Ursula von der Leyen, addressed a joint press briefing with Modi, highlighting the trade opportunities and future collaborations between the two economies. "We have tasked our teams to build on this momentum and finalise our FTA before the end of the year," she said. "We told them they should surprise us."

India is also pushing for higher EU investments in areas such as clean energy, urban infrastructure, and water management. Meanwhile, New Delhi is looking for easier mobility for its skilled workforce and higher investments for ventures in India.

The visit, billed as the first of its kind to the world’s fifth-largest economy, follows the announcement of US President Donald Trump’s new tariffs, which have added pressure on global trade relations. Despite this, India’s economy has remained resilient, continuing its steady growth.

The EU hopes to find common ground with India on shared concerns over China’s growing influence in the Asia-Pacific, building resilient supply chains, and the governance of new technologies including artificial intelligence. Von der Leyen also mentioned the possibility of a future Security and Defence Partnership with India to counter common threats such as cross-border terrorism and maritime security.

Von der Leyen and Modi were also expected to discuss Russia’s war in Ukraine, although the EU chief’s statement after the meeting did not directly mention the subject. India has resisted Western pressure to distance itself from Moscow, its traditional supplier of military hardware, following Russia’s invasion of Ukraine.