India and EU drawing closer to navigate Trump and China pressures

They are keen to diversify their markets away from US, reduce over-reliance on Chinese imports

- Debarshi Dasgupta

KOLKATA - India and the European Union have been in a "strategic partnership" since 2004, but never perhaps has this relationship attained the strategic importance that it has today.

The two sides find themselves increasingly aligned not just over shared economic and strategic interests, their common belief in multilateralism as well as people-to-people links, but also due to evolving geopolitical factors, stemming especially from US President Donald Trump's chaotic policy decisions and the need to decouple from China.

Seen in such a context, Indian Prime Minister Narendra Modi's recent visits to Croatia and Cyprus were not just an attempt to deepen bilateral ties with these two EU member states, but also an effort to further the overall India-EU strategic partnership.

Two pressing issues came up during discussions in Zagreb and Nicosia: the need for an early conclusion of the India-EU free trade agreement (FTA), which is expected to boost bilateral trade and supply chain resilience; and the India-Middle East-Europe Economic Corridor (IMEC), an ambitious trade and energy corridor that is still in its early conceptual stages.

A trade deal that has been in discussion for many years has gained renewed urgency, with both sides hoping to conclude an FTA by the end of 2025 - a plan announced during European Commission President Ursula von der Leyen's visit to India in February when she led the EU College of Commissioners on its first visit to the country.

The EU is already India's second-largest trading partner, accounting for goods trade worth €120 billion (S$178 billion) in 2024, or 11.5 per cent of India's total trade. And India is the EU's ninth-largest trading partner, accounting for 2.4 per cent of the EU's total trade in goods in 2024, trailing far behind the US, China and the UK.