India-EU Free Trade Based on Strategic Necessity

The India-EU trade deal constitutes the first major bilateral trade agreement between two of the world’s largest economic entities and is expected to see a sharp rise in trade between the two sides. At the same time, the trade deal only partially liberalises sensitive sectors like agriculture, excludes government procurement, and leaves many non-tariff barriers in place. In some areas like the automobile sector, tariff reductions will be phased in over a period of 10 years. This apparent gap between political ambition and limited liberalisation should not simply be understood as a shortcoming of the trade deal. Rather, the nature of the agreement illustrates a defining feature of the emerging EU-India relationship. Unlike many of Europe’s traditional partnerships, the EU’s approach to India is driven by a strategic partnership that both sides increasingly pursue out of necessity. At a time when major international disruptions put Europe’s and India’s economic models under pressure, both actors recognise a growing need to diversify trade relations, reduce geo-economic risks, and cultivate new partnerships. It points that the dramatic change in the geopolitical landscape after Donald Trump took over as US President and the Russia-Ukraine war and China’s muscle flexing in the Indo-Pacific region have forced the EU to look at India as a new strategic partner. Until recently, Europe relied on its security partnership with the United States, the Chinese export market, and cheap fossil energy imports from Russia. Within a few years, all three dependencies turned into liabilities. An emerging threat perception toward China provided the initial EU-India momentum. The EU’s joint communication on China in 2019 prominently labelled Beijing as a partner, competitor, and rival; the subsequent Indo-Pacific Strategy emphasised the importance of the EU’s relations with New Delhi