New Delhi — India and the European Union agreed to wrap up a free trade deal by the end of this year, the two sides announced Friday following talks in the Indian capital between Prime Minister Narendra Modi and European Commission President Ursula Von der Leyen. While negotiations between India and the EU have dragged on for years, analysts say there is a greater urgency to conclude a pact as the threat of tariffs by U.S. President Donald Trump prompts many countries to ramp up efforts to increase access to markets outside the U.S. Von der Leyen came to New Delhi along with leaders of EU countries. Following talks with the Indian prime minister, she called India a “like-minded friend” and said that “we have tasked our teams to build on this momentum” to finalize a free trade pact. Both sides also discussed elevating their defense and security partnership. Modi said they had prepared a “blueprint for collaboration” in areas such as trade, technology, investment and security. Before her meeting with Modi, von der Leyen said the EU and India “have the potential to be one of the defining partnerships of this century” and it was time to take their strategic partnership to “the next level.” A flux in geopolitics is pushing countries to diversify partnerships, analysts say. “For India, which is scrambling to navigate the turbulence unleashed by Trump, Europe emerges as a valuable partner,” political analyst C. Raja Mohan wrote in The Indian Express newspaper. “While neither can afford to disengage from the U.S., both India and Europe must do more to strengthen their ties in response to Trump’s unpredictable policies.” A free trade agreement between the EU and India “would be the largest deal of this kind anywhere in the world,” von der Leyen said. “It is time to be pragmatic and ambitious and to realign our priorities for today’s realities.” Trump has said he will impose a 25 percent tariff on imports from the European Union. His plans for reciprocal tariffs also will hit Indian exports to the U.S. The EU is India’s largest trading partner in goods — bilateral trade was more than $130 billion in 2023-24. Negotiations between India and the EU began years ago but were stalled for eight years before resuming in 2021. The main sticking points have been New Delhi’s reluctance to lower tariffs on key European imports to India, such as cars, whiskey and wine, while the EU has been reluctant to concede New Delhi’s demand to ease visa curbs on Indian professionals. India also wants greater access to the EU for cheaper drugs and chemicals. India, the world’s fifth largest economy with a large middle class, is seen as an attractive market but has high protectionist barriers. Earlier this week, India and the UK also resumed trade talks during a visit by British business and trade secretary Jonathan Reynolds to New Delhi. India’s commerce minister, Piyush Goyal, said both countries aim to double bilateral trade in a decade. Reynolds said that securing a trade deal was a “top priority” for his government. Trade analysts say there is a “sense of urgency” to seal trade pacts. “It seems there is a real intent on part of India and other partner countries to do something this time. The timing is important – President Trump’s threat of tariffs can cause trade disruptions. So, I think countries want to conclude deals before the global mood changes from being relatively open to more protectionist,” according to trade analyst Biswajit Dhar in New Delhi. While India has made slow progress in clinching free trade pacts in the past, it is now stepping up efforts to conclude deals amid fears that potential shifts in global trade could pose a challenge to meeting Prime Minister Modi’s goal of growing exports to $1 trillion by 2030. “The trade uncertainties being unleashed by Trump’s tariffs will push the Indian government to look at the levels of protection in the country more closely. It can’t afford that any longer,” said Dhar. “Every major country is interested in the large Indian market but complains about high tariffs.”
