Context:
The European Union (EU) wants to obtain more firm commitments from India concerning tariff reductions on imports of cars, wines, and spirits as part of the ongoing Free Trade Agreement (FTA) negotiations. The joint meeting between PM Narendra Modi and URSULA VON DER LEYEN, President of the European Commission, is now taking place later this week in this connection.
Key Highlights:
- 10th round of FTA negotiations is scheduled from 10-14 March in Brussels and will resume after a gap of six months.
- Besides, Von der Leyen’s visitation (Feb 27-28) brings along with it EU commissioners from 21 countries, underscoring the strategic focus of the EU on India.
- The bilateral talks will pave the path towards the proposed India-EU summit in the second half of 2025.
Discussion Major Topics
Trade & Market Access
- Lower import duties on automobiles, wines, and spirits are demanded by the EU.
- India is insisting on better market access for pharmaceuticals, IT services, textiles, and agricultural products.
- The critical FTA would boost India EU bilateral trade from 120 billion dollars in 2023.
Geopolitical Context & Strategic Shifts
- The timing of the meeting tops all that considering the escalating trade tensions between the US and the EU and reciprocal tariff threats from Donald Trump.
- Europe wants to understand India as an alternative supplier through which it wants to manage its dependence on China and diversify accordingly.
India’s Position on the Russia Ukraine Conflict
- EU officials are likely to raise alarms about India’s trade issues with Russia, especially with regard to energy and defense.
- The country’s potential role in peace talks in Ukraine might also be on the table.
India Middle East Europe Economic Corridor (IMEC)
- The discussion will revolve largely on the progress of IMEC, which is a strategic infrastructure project.
- The EU considers IMEC as a counterbalance to China’s Belt and Road Initiative (BRI).
Critical Importance
- Strengthening India EU Trade Ties
- India is the 10th largest trading partner for the EU, an FTA could boost investments and exports.
- Reducing China Dependence
- The EU is looking at India as a reliable alternative in key sectors such as manufacturing, semiconductors, and green energy.
- Balancing Global Trade Alliances
- The stakes for trade between India and Europe have risen to unprecedented heights with US-EU tensions and Chinese trade hegemony.
This will set the stage for even deeper economic and geopolitical cooperation with the Modi von der Leyen meeting. Although tariff negotiations remain a challenge, shared strategic interests could accelerate an India-EU trade agreement.
