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EU and India Forge Ahead on Strategic Partnership with Focus on Trade, Investment, and Sustainability

by EUToday Correspondents
EU and India Forge Ahead on Strategic Partnership with Focus on Trade, Investment, and Sustainability

The European Union (EU) is intensifying efforts to strengthen its strategic partnership with India, with a focus on advancing trade, investment, and sustainable development.

Building on the relaunch of negotiations in 2022 for a Free Trade Agreement (FTA), the partnership reflects mutual ambitions to enhance economic ties and address shared global challenges.

Progress on Trade and Investment Agreements

The EU-India trade relationship is already significant, with the EU ranking as India’s third-largest trading partner, accounting for €88 billion in goods trade in 2021 (10.8% of India’s total trade). Meanwhile, India is the EU’s 10th-largest trading partner, making up 2.1% of the bloc’s goods trade. Trade in services between the two reached €30.4 billion in 2020, further highlighting the depth of the economic relationship.

Negotiations for the FTA aim to achieve several key goals:

  • Removing barriers to help EU firms, especially small and medium-sized enterprises (SMEs), export more effectively.
  • Opening up markets for services and public procurement.
  • Ensuring protection of geographical indications (GIs) to safeguard distinctive regional products.
  • Pursuing ambitious commitments on trade and sustainable development.
  • Enforcing agreed rules to ensure reliability and fairness.

Alongside the FTA, the EU and India are working on an Investment Protection Agreement to create a predictable and secure environment for investors on both sides. The agreement seeks to:

  • Provide non-discrimination protections.
  • Safeguard against expropriation without compensation and unfair treatment.
  • Allow for the transfer of returns.
  • Establish a state-of-the-art dispute settlement mechanism to enforce the agreed rules effectively.

These agreements aim to strengthen investor confidence, boost economic collaboration, and deepen ties in key sectors such as technology, pharmaceuticals, and renewable energy.

A Shared Vision for Sustainable Development

The EU and India are committed to sustainable development as a cornerstone of their partnership. Renewable energy is a particular area of focus, with both sides exploring collaboration in solar, wind, and green hydrogen technologies.

India’s leadership in the International Solar Alliance aligns closely with the EU’s Green Deal objectives, offering a framework for joint efforts in clean energy production and infrastructure development.

Additionally, the trade negotiations seek to integrate ambitious commitments on sustainability, ensuring that economic growth aligns with environmental and social goals. Both sides are exploring innovative approaches to achieving circular economies and decarbonisation.

Addressing Geopolitical and Economic Challenges

The partnership also aims to address broader geopolitical and economic challenges. Maritime security, counter-terrorism, and Indo-Pacific stability are critical areas of dialogue. Enhanced cooperation in these domains reflects shared concerns over regional security and the rules-based international order.

On the economic front, reducing barriers to market access and diversifying supply chains remain priorities for both the EU and India. These efforts aim to mitigate vulnerabilities exposed by the COVID-19 pandemic and other global disruptions, creating a more resilient and robust economic partnership.

Opportunities and Challenges

Despite the opportunities, challenges remain, particularly in aligning regulatory frameworks and addressing differences in trade priorities. However, the renewed commitment to negotiations signals a determination to overcome these obstacles. By fostering mutual trust and collaboration, the EU and India are poised to unlock significant economic and geopolitical benefits.

Looking Ahead

As the EU and India prepare for a milestone summit in 2025 to mark 50 years of diplomatic relations, the groundwork is being laid for a more comprehensive and future-ready partnership. The agreements under negotiation, once finalised, are expected to boost economic growth, create jobs, and promote sustainable development on both sides.

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