Opinion Analysis News

EU in India: Friends with benefits, situation-ship or simply casual flirting?

New Delhi: If you have heard of the ‘laws of attraction’ you would appreciate that India is right in the center of it. Be it the law of magnetism, manifestation or just unwavering desire, the South Asian country is calling all the shots right now. Is it mere positivity that is attracting other countries and associations to seek India’s partnership, or is there more to this emerging world order? Only time will let us know, but for the moment New Delhi should make all the hay as the sun shines.

As we write this piece, the European Commission president Ursula von der Leyen is en route to India for a two-day visit starting February 27. She is accompanied by an entourage of 27 Commissioners of the EU aka the College of Commissioners. The visit is particularly noteworthy as this marks the first-ever visit of the EU College of Commissioners together to India. According to the Ministry of External Affairs, the visit is also “among the first such visits since the start of the mandate of the current European Commission in December 2024 after the European parliamentary elections held in June 2024.”

Trade and Tariffs is on the agenda menu, according to officials in the know. Chief Leyen and her commissioners are scheduled to hold talks with Prime Minister Narendra Modi in New Delhi during their two-day visit and the focus could most likely be on the Free Trade Agreement and the EU-India Trade and Technology Council (TTC).

By the looks and the talks around it, the Bloc seems to be aiming at making this meet with India, very “commercially meaningful.” Free trade agreements that would address tariffs and non-tariff barriers, especially on commercial items, will hog most of the limelight in the coming few days. There are a few questions, however, that come to mind. First, why this leaning towards India suddenly? Second, should New Delhi also try to leverage the opportunity, and third, will EU’s de-risking China work in its favour?

Why India, or why not?

Ahead of this visit, von der Leyen had even gone on record hailing India as one of EU’s “most trusted friends and allies.” She said “In this era of intense geostrategic competition, Europe stands for openness, partnership, and outreach.” The fact that she has extended this branch of friendship towards the fifth largest economy in the world, speaks volumes of the image that India carries for the rest of the world. A fact that has been attested by most world leaders.

According to the Ambassador of the Delegation of the European Union to India, Herve Delphin, the visit underscores the importance that the EU attaches to the relationship with India. “We both see each other as partners of choice but also as forces for good,” he told the media. It is apposite to mention here that India and the EU already share strong trading ties, in fact the Bloc is India’s largest trading partner. It accounts for a hefty €124 billion (converted to over Rs 11 lakh crore) in trade in 2023. This is more than 12 per cent of total Indian trade, according to the EU. On the other hand, for the EU, India is their 10th largest trading partner, making up around 2 per cent of the EU’s total trade.

The ties stretch to services as well with the EU-India trade being worth over €40 billion in 2023, with sectors like IT, business services, and consulting leading the way. On matters of FDI, the Bloc is one of India’s largest sources of FDI, with cumulative investments exceeding €100 billion. Other investors of the EU include Germany, France, the Netherlands, and Sweden, with investments in automobiles, energy, manufacturing, and fintech.

It is abundantly clear as to why the EU would want to extend trade ties with such a robust partner in India. Given the growth rate of the country and with a shifting geopolitical strategies, it already appears to be a win-win situation.

What’s on offer?

There are three core areas of concern that will most probably make it to the discussion over these two days. First and foremost being the Tariff talks. The EU considers India to be a relatively closed market, especially when it comes to products of commercial interest to the European Union and to the member states’ industries. These products mostly include cars, wines and even high-end spirits such as whiskey.

India’s exports to the EU have previously included items such as machinery, pharmaceuticals, textiles, chemicals, IT services, and agricultural products while the Bloc has been exporting chemicals, transport equipment, medical devices, and renewable energy technology to Indian shores. Today’s meeting would probably add items to the list and make them more tariff friendly so that trade grows monumentally.

Apart from this T&T talks, there is bound to be chatter on the Free Trade Agreement, with main focus being on the Trade and Technology Council (TTC) that was announced in 2022. The TTC is a platform that was conceived to be discussing digital economy, clean technology, trade and investment. The talks for this happened in 2022, with the next round of negotiations scheduled for March 10 -15 in Brussels.

FTA negotiations are also supposed to be kickstarted after a decade long impasse.

Will EU’s distancing from US, China benefit India?

Given the timing of the visit and the agenda that the Bloc wants to bring to the table when the chief meets PM Modi, it’s amply clear that the EU is seeking to de-risk from China and the US. Hence, it is looking to India, to enhance trade and participation. But what does it mean for India? It would definitely create more opportunities for the country and reduced US influence on the Bloc will only ensure that the EU adopts a more independent trade strategy, one that doesn’t follow stringent trade restrictions. This distancing from US could actually make the India-EU FTA faster, giving Indian markets better access to the entire Europe.

We have already spoken of a services boost once the Bloc opens itself fully to Indian shores. The moving away from US and China would mean less dependence on their services as well. This in turn could help India emerge as an alternative supplier in IT services, pharmaceuticals, and green technology.

Over all, a fruitful romance is on the horizon, and India is an equal partner!