From Defence To Worker Mobility, India-EU Free Trade Deal To Create History

New Delhi, Jan 27: India and the European Union (EU) are likely to announce a historic, mega free-trade agreement (FTA) today. The two sides are expected to produce a broader vision to navigate the uncertainties triggered by US President Donald Trump’s policies.

The FTA is expected to bring a qualitative change in deepening the overall bilateral ties in a range of sectors. The broad focus of today’s meeting will be on trade, defence and security, climate change, critical technologies and strengthening the rules-based global order.

The two sides are also set to unveil a defence framework pact and a strategic agenda. The new partnership comes at a time when Europe is seeking to reduce its dependence on the US and China, and deepen its diplomatic and economic ties to other regions.

Prime Minister Narendra Modi will host European Commission President Ursula von der Leyen and European Council President Antonio Costa at the summit. Costa and von der Leyen graced the 77th Republic Day celebrations at the Kartavya Path as chief guests.

Von der Leyen last week said India and the EU are on the cusp of a “historic trade agreement” that would create a market comprising two billion people, accounting for almost a quarter of the global GDP.

India and the European Union have been strategic partners since 2004. The proposed Security and Defence Partnership (SDP) will facilitate deeper defence and security cooperation between the two sides.

The SDP will bring interoperability in the defence domain and will open up avenues for Indian firms to participate in the EU’s SAFE (Security Action for Europe) programme. SAFE is the EU’s 150 billion euro financial instrument designed to provide financial support to member states to speed up defence readiness.

The EU and India had first launched negotiations for the free-trade agreement in 2007, before the talks were suspended in 2013 due to a gap in ambition. The negotiations were relaunched in June 2022.

A memorandum of understanding on facilitating the mobility of Indian workers to Europe is expected to be another key outcome of the summit. It will provide a framework for advancing mobility initiatives by EU member states with India. France, Germany and Italy are among the European nations that have migration and mobility partnerships with India.

They are likely to deliberate on pressing global challenges, including the Russia-Ukraine war. While the two sides don’t see eye-to-eye on everything, they do share a core set of interests which include having a stable international order.

The ties between India and the EU have been on an upswing over the last few years. The EU, as a bloc, is India’s largest trading partner in goods. For the financial year 2024-25, India’s total trade in goods with the EU was worth about $136 billion, with exports around $76 billion and imports at $60 billion.