India and EU Set to Finalize Major Trade and Defense Agreements at Upcoming Summit

Significant Developments on the Horizon

New Delhi: India and the European Union are poised to announce the finalization of a free trade agreement, a strengthened defense partnership, and a framework to facilitate the mobility of Indian professionals during their summit talks next week, according to diplomatic sources.

European Council President Antonio Costa and European Commission President Ursula von der Leyen will attend the Republic Day celebrations on January 26, with the India-EU summit scheduled for the following day.

A military contingent from the EU, showcasing the military staff flag along with the flags of Operations Atalanta and Aspides, will participate in the Republic Day parade, marking the EU's inaugural involvement in such an event outside Europe.

The summit is expected to address pressing global issues, including the ongoing Russia-Ukraine conflict, the situation in the Middle East, and political developments in Venezuela.

The EU leaders will be accompanied by a delegation of 90 members, including foreign and security policy chief Kaja Kallas, trade commissioner Maros Sefcovic, and various director generals overseeing trade, energy, and industrial policy.

As India's largest trading partner, the EU accounted for USD 135 billion in bilateral trade in goods during the financial year 2023-24.

The anticipated free trade agreement is expected to significantly bolster trade relations between the two entities.

Both parties are likely to adopt a document confirming the conclusion of negotiations for the free trade agreement, which is considered India's most significant trade deal in recent years.

Following this, the legal review process will commence, leading to the signing of the trade agreement.

Initially, the European Parliament will need to vote on the agreement, followed by approval from the European Council before Trade Commissioner Sefcovic can sign it with his Indian counterpart.

This ambitious free trade agreement is being developed amid growing concerns regarding the trade and tariff policies of Washington, which have affected both India and the 27-member EU.

Additionally, India and the EU are expected to unveil a comprehensive strategic vision document that will guide their relationship from 2026 to 2030.

Negotiations are ongoing to resolve contentious issues such as the Carbon Border Adjustment Mechanism (CBAM), which imposes tariffs on carbon-intensive products like steel and cement.

The EU maintains a firm stance on CBAM, with no alterations made for the US or other partners, although both sides are working towards a 'compromise solution' on this sensitive matter.

Efforts are also underway to address the inclusion of climate-related standards under the Paris Agreement.

Progress has been made regarding agricultural issues, with both sides having identified and mapped each other's red lines.

India has adopted a stringent stance on dairy and agricultural products, while agreements have already been reached concerning wines and spirits, with potential tariff-rate quotas for the automobile sector.

Both parties are also working to narrow differences on steel.

Negotiations for the free trade agreement were initially launched in 2007 but were suspended in 2013 due to differing ambitions, with talks being revived in June 2022.

The proposed Security and Defence Partnership (SDP) aims to enhance defense and security collaboration between India and the EU.

The SDP will promote interoperability in defense and open opportunities for Indian companies to engage in the EU's SAFE (Security Action for Europe) program, a €150 billion financial initiative designed to bolster defense readiness among member states.

During the summit, India and the EU will also initiate discussions for a Security of Information Agreement (SOIA), which is expected to strengthen industrial defense cooperation.

Another significant outcome anticipated from the summit is a memorandum of understanding aimed at facilitating the mobility of Indian workers to Europe, providing a framework for mobility initiatives by EU member states with India.

Countries such as France, Germany, and Italy already have migration and mobility partnerships with India.

The two sides are also expected to sign additional agreements to enhance cooperation across various sectors.