EU Proposed 'New Strategic EU-India Agenda' | 19 Sep 2025

Source: IE  

Why in News?

The European Union has unveiled a New Strategic EU-India Agenda aimed at elevating bilateral relations with India, focusing on five strategic pillars of shared interests and complementary strengths.

• The EU has committed to finalizing a Free Trade Agreement (FTA) with India by the end of 2025, which will be the largest deal of its kind anywhere in the world.

What are the Five Pillars of the ‘New Strategic Agenda’ Between India & the EU?

• Prosperity, Sustainability, Technology & Innovation: The agenda highlights untapped potential in trade and investment, with priority on finalizing the Free Trade Agreement (FTA) and strengthening supply chains through the Trade and Technology Council (TTC). 
  • It advances tech cooperation through the EU-India Startup Partnership and Horizon Europe, while supporting the green transition and collaboration on food security, health, climate resilience, and disaster management.
• Security & Defence: It focuses on maritime security, cyber defence, counterterrorism, crisis management, and defence industrial cooperation to boost production, technology, and innovation. 
• Connectivity & Global Issues: It supports the India-Middle East-Europe Economic Corridor (IMEC) and Global Gateway, promoting trilateral cooperation with third countries. 
  • It also emphasizes active engagement in multilateral forums to strengthen international law, multilateral values, and global governance.
• People-to-People Cooperation: It promotes skills mobility through the European Legal Gateway Office and a framework for study, work, and research.
  • It also encourages deeper engagement with civil society, youth, think tanks, and businesses, including a proposal for an EU-India Business Forum.
• Enablers across pillars: It aims to enhance EU-India coordination at all levels, build a comprehensive strategic plan based on shared priorities, and align with EU Member States via the Foreign Affairs Council.

What is the Significance of India-EU Relations?

Mutual Significance

• Diplomatic Relations: India established ties with the European Economic Community in 1962; elevated to a Strategic Partnership at the 5th India-EU Summit (2004, Hague).
• Trade Partnership: The EU is India’s second-largest trading partner (€120 billion, 11.5% of trade).
• Strategic Alignment: India and the EU share interests in security, renewable energy, climate action, and multilateralism, through bilateral dialogues on counter-terrorism, cyber security, migration, maritime security, human rights, non-proliferation, and disarmament.
• Infrastructure Cooperation: The India-EU TTC fosters semiconductors, AI, clean energy, and digital finance cooperation, with the EU supporting economic and technological ties aligned to India’s multi-alignment without security dependencies.
• Global Governance: The EU is reducing economic reliance on China, supporting India’s trade diversification, with both advocating a rules-based order in multilateral forums like the G20, WTO, and UN Security Council.

Significance For India

• Economic Relations: India is the EU’s ninth-largest partner (2.4% of EU trade, 2024). FDI inflows from the EU to India valued at USD 107.27 Billion (Apr 2000-December 2023), drives industrial growth, job creation, and technology transfer in India.
  • The EU offers opportunities for IT, pharmaceuticals, textiles, and agriculture exports; bilateral services trade rose 48% (2019–2022).
• Security & Defence: European defence companies support India’s defence modernization under Make in India, e.g., manufacturing Airbus C-295 aircraft locally.
• Technology & Innovation: The India-EU TTC focuses on semiconductors, AI, and clean energy, while digital payments and fintech cooperation expands via cross-border transactions.

Significance For EU

• Market Access: India offers the EU access to a large, growing market, exemplified by the 2024 Trade and Economic Partnership Agreement (TEPA) with the European Free Trade Association (EFTA) countries (Iceland, Liechtenstein, Norway, Switzerland).
• Cultural & Educational Ties: India’s young, skilled workforce strengthens Europe’s talent pool and academic collaborations.
• Geopolitical Cooperation: India’s strategic Indo-Pacific position and growth enhance the EU’s influence in the Global South.
• Security & Stability: India ensures Indian Ocean security, safeguarding over 35% of Europe-Asia trade.

What are the Key Barriers to India-EU Relations?

• Stalled FTA Negotiations: FTA talks are delayed because the EU wants lower tariffs on automobiles, spirits, and dairy, while India seeks market access for pharmaceuticals and IT services;
  • The EU’s Carbon Border Adjustment Mechanism (CBAM) adds extra challenges for Indian exporters. 
• Investment & Regulatory Barriers: The EU’s restrictive trade regulations, including technical barriers to trade (TBT) and sanitary & phytosanitary (SPS) measures, affect Indian businesses.
  • While European investors seek a predictable policy environment and stronger investment protection, highlighted by Switzerland suspending the Most favoured nation (MFN) clause in its Double Taxation Avoidance Agreement (DTAA) with India.
• Data Privacy Challenges: Strict EU data laws make digital exports costly. India’s lack of EU data adequacy status forces small IT firms to incur high compliance costs, limiting competitiveness.
• Foreign Policy Divergences: India’s involvement in Russian military exercises and purchase of Russian oil hinder closer EU ties, as the EU expects stronger alignment on Russia sanctions, while India continues its neutral diplomacy.
• Supply Chain Risks: Despite efforts to diversify trade, China continues to be a major partner for both India and the EU, posing significant risks to supply chains. 
  • This dependency exposes both regions to geopolitical tensions and disruptions, underlining the need for more resilient and diversified trade routes.

What Strategies Can be Adopted to Strengthen India-EU Relations?

• Accelerate FTA and Trade Facilitation: Resolve tariff disputes and fast-track FTA negotiations to strengthen supply chains and reduce trade barriers. 
  • Promote high-tech exports and attract European investment in India’s manufacturing sector to drive growth.
• Establish a Data-Sharing Framework: Negotiate an EU-US style Privacy Shield for seamless cross-border data flows and implement mutual recognition frameworks to lower compliance costs for Indian firms.
• Green Technology Partnerships: Enhance cooperation in renewable energy, fintech, and data privacy, while collaborating on green hydrogen, electric vehicles, and carbon-neutral technologies.
• Reform Investment Policies: India needs to strengthen intellectual property rights (IPR) protections and ease of doing business to encourage European tech firms to set up R&D hubs.
• Enhance Security Cooperation: Expand joint naval exercises, cyber defense partnerships, and intelligence sharing, while aligning India’s Indo-Pacific strategy with European defense priorities to counter China’s regional assertiveness.

Conclusion

The New Strategic EU-India Agenda underscores the growing significance of India-EU ties in trade, technology, security, and global governance. Strengthening cooperation through FTA, green technology, digital frameworks, and defence partnerships can enhance economic growth, strategic autonomy, and multilateral influence, while addressing challenges like regulatory barriers, data laws, and geopolitical divergences.