Resurrection, Reckoning, Reasoning and the Rise of the EU and India in the Pew Geo-Political Setting

By Dhiraj Mani Pathak -
Resurrection, Reckoning, Reasoning and the Rise of the EU and India in the Pew Geo-Political Setting

Shreya Pandey and Dhiraj Mani Pathak examine the increasing economic ties between India and the EU, both being characterised by diversity and democracy and positioning themselves in the rivalry between the US and China. The is a chapter of a forthcoming e-book by the Global Governance Research Group of the UNA Europa network, entitled ‘The European Union in an Illiberal World’.

Introduction

Realist scholars always cast a pall of gloom whenever they surmise about the past, present and future of international relations. Nothing is supposed to function like clockwork. There is a palpable fear as everyone seeks to ensure their survival in an extremely hostile atmosphere. Neo-liberals, by contrast, take a more sanguine view of what goes on in the international system, yet concur with the realists that the structure of the international system portends hostility and by no means assures that cooperation and coexistence shall rule the roost. The liberals who espouse complex interdependence, in fact, also state that it would be an act of prudence to “realise its limitations” (Nye, 1990, p. 241). The conceptual foundations of neo-realism and neo-liberalism reveal that they incorporate common “assumptions on anarchy, state rationality and institutional roles in easing tensions in the anarchic system” (Alhammadi, 2022; Nye, 1988). Thus, the utility and significance of both theories have been highlighted by scholars in numerous discussions on the subjects of “global security and institutional cooperation” (Hellmann & Wolf, 1993, p. 3).

Present-day scholars of institutional liberalism have transcended the thought of their predecessors who had absolute faith in idealism. They accept that institutions enhance and facilitate cooperation, “but they do not claim that such institutions can by themselves guarantee a qualitative transformation of international relations, from a ‘jungle’ to a ‘zoo’. Powerful states will not be easily constrained” (Jackson & Sørensen, 2013, p. 249). Theoretical pluralism is the order of the day as it enables in-depth examination of “compatible yet distinct causal mechanisms from major paradigms” which explain international affairs in a more holistic manner than any other single theory (Sil & Katzenstein, 2010, p. 48).

The EU and India established diplomatic relations way back in 1963 and have exhibited a very high degree of willingness to cooperate on various fronts throughout the different phases of the partnership, barring a few episodes of rancour, which have been resolved amicably. This is indeed a very critical moment in history, increasingly dominated by Sino-American rivalry, where a rethink and recalibration of EU-India relations in all possible metrics is necessitated in order to continue being relevant in the global international economic and political universe. This paper therefore seeks to examine the various fronts on which the EU-India partnership can be significantly enhanced by means of greater involvement and precise interventions with special reference to the on-going EU-India Free Trade Agreement (FTA) negotiations, which shall prove to be mutually beneficial for both partners and lead to the creation of a sturdy EU-India partnership.

Current EU-India trade volumes

The EU–India relationship decidedly prioritises the economic dimension. Merchandise and services together form a dense, mutually reinforcing trade and investment link. In 2023, the EU–India goods trade stood at about €124 billion, while trade in services reached €59.7 billion, producing a combined bilateral total of roughly €183.7 billion — a recovery that follows the pandemic dip and underscores how services have become a decisive growth vector (European Commission, 2025). 

A surge in trade in services has been fast-paced, especially in the period 2020-2023 when service flows nearly doubled (from about €30.4 billion to €59.7 billion), driven largely by digital, IT and business-services exports from India and rising European demand for knowledge-intensive inputs (European Commission, 2025). Scholarly analysis finds that the prospective EU–India FTA is therefore a services-centred bargain — modest tariff gains on goods are likely to be eclipsed by regulatory and market-access gains in finance, telecoms and professional services (Nordås, 2023), while country-level studies emphasise both opportunity and adjustment costs for incumbents on each side (Dash, 2024). 

Investment ties deepen the story. EU firms hold a substantial FDI stock in India (around €140.1 billion in 2023), signalling that trade is embedded in production networks, services delivery and long-term commercial presence rather than one-off shipments (European Commission, 2025). Taken together, these patterns explain why negotiators stress a comprehensive pact — one that locks in rules for digital trade, mutual recognition of qualifications and regulatory cooperation so that bilateral trade evolves from episodic peaks into predictable and durable integration. 

Meeting mid-way for the resolution of contentious issues

The European Union has called on India to completely do away with the imposition of tariffs on car imports to seal the trade deal, which has not seen the light of day for years. India has conceded considerable ground, unlike its previous stance on such issues. India, which imposes a tariff of over 100%, has agreed to initiate a gradual decline in the tariff to 10%. The EU’s aggressive bargaining with India has come to the fore in the light of US demands upon India to eliminate import duties on cars, including electric vehicles. The European beneficiaries of this significant step would include Volkswagen, Mercedes-Benz and BMW, much to the chagrin of Indian automobile manufacturers who are pushing for retaining at least a 30% tariff and a freeze on tariff reductions on electric vehicles for the next four years, as Tata Motors and Mahindra & Mahindra claim that they want to reap the benefits in this sector where they have put in massive investments (Times of India, TOI Business Desk, 2025).

A lot of issues still need to be resolved in order to lay to rest all the bickering that accompanies every round of negotiations for finalising the EU-India FTA. Steel, aluminium and cement making their way from India to the EU will be slapped with tariffs of 20–35% under the Carbon Border Adjustment Mechanism (CBAM), despite the EU-India FTA. The EU is also known to impose restrictions on remote online service delivery, which defeats the very purpose of digital trade, as Indian companies are compelled to bear extra costs and comply with additional legal rules, unlike entities from Japan and South Korea. 

India is being forced to comply with GDPR despite having enacted its own Digital Personal Data Protection Act, 2023. India has also put forth the demand for easier business visas as well as recognition of professional qualifications through Mutual Recognition Agreements (MRAs) for its professionals, while the EU has demanded access to India’s banking, legal, accountancy, auditing and financial services sectors. The EU is also demanding that India open up its government procurement market, although the former’s own procurement market denies access to non-EU firms. India wishes to adhere to the Model Bilateral Investment Treaty (BIT) it has drafted, while the EU wants to expand the concessions above and beyond those mentioned in the framework. The EU is also insisting that India observe provisions going much further than the WTO’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement.

Moreover, the EU wants a safe and unhindered passage for products like Champagne, Roquefort cheese and Prosciutto di Parma, which should be given immediate Geographical Indications protection in India without undergoing the established procedure of standard verification — unlike Basmati rice, Darjeeling tea and Alphonso mangoes, which are expected to go through mandatory checks in the EU (The Economic Times, 2025).

The normative power of the EU’s regulatory framework is indeed an integral part of the EU’s institutional identity and foreign policy orientation. However, this normative ambition frequently encounters resistance from partner countries such as India, which do not necessarily share the EU's interest-led motivations or embrace its multilateral norm-diffusion strategies through trade agreements (Orbie & Khorana, 2015). Although the EU and India are democracies and espouse ostensibly similar values, their bilateral relations have historically remained "high on rhetoric and low on substance" (as extensively documented by the European Union Council on India Cooperation White Paper, 2023, and reinforced by recent policy analyses), with persistent divergences in regulatory frameworks, intellectual property protection regimes, and sustainability standards continuing to impede deeper economic integration (European Commission, 2024; Bruegel, 2025). These structural constraints reflect not merely technical incompatibilities but fundamental differences in how each actor conceptualises sovereignty, development priorities, and the legitimacy of externally imposed regulatory standards, particularly evident in negotiations surrounding trade barriers, tariff structures, government procurement, and climate-related mechanisms such as the Carbon Border Adjustment Mechanism (European Commission & High Representative, 2025).  

The EU needs to realise that the West alone should under no circumstances assume itself to be the sole custodian of liberal values, as there are “some powerful, homegrown, and even ancient traditions of liberalism in the Global South”. Countries like India “reclaim” and “amplify” their own discourse on liberalism as witnessed during events such as the Voice of the Global South Summit held a couple of years ago (Kurzdorfer & Narliker, 2023). EU officials are of the view that India seems to be “EU’s most difficult strategic partner” as her approach towards decision-making and negotiations is dictated by the concept of strategic autonomy which “makes India unwilling to yield and adapt its positions where compromise may still be possible” (Naukowe, Artykuly & Jaskolska, 2024). Differences in worldviews and normative orientation make it difficult to adhere to pragmatism. Nevertheless, whatever tangible potential for cooperation exists must be addressed within these parameters in order to achieve a deeper partnership (Cacicedo, 2024).

The adoption of a pragmatic approach

Prime Minister Narendra Modi and the European Commission President Ursula von der Leyen committed themselves during a summit held in India on 27-28 February 2025 to finally conclude the long-drawn negotiations for the EU-India FTA, which began way back in 2007 (Ministry of External Affairs, 2025). In fact, the negotiations have taken centre stage on account of the unprecedented, wayward and impulsive actions taken by the United States under the stewardship of Donald Trump (Da Lage, 2025).

Buoyed by the finalisation of the UK-India Free Trade Agreement, India wants to cash in and repeat this successful drill with the European Union (Jagota, 2025). In the light of these developments, the eleventh round of EU-India FTA talks took place in May 2025. Several chapters were successfully closed and the talks were geared towards better market access and strengthening diverse supply chains in both regions. The Union Minister of Commerce and Industry, Piyush Goyal, hailed the latest EU-India FTA negotiations as “highly productive” and said it helped reshape the strategic direction of the India-EU relationship (Ministry of External Affairs, 2025).

The Indian Commerce and Industry Ministry has decided to fast-track the EU-India FTA talks and hold them on a monthly basis (Mishra, 2025). India is perceived to be, perhaps rightly so, extremely protectionist when it comes to negotiating a trade deal. Yet the change in the Indian approach seems more than palpable as it endeavours to “expand its global economic footprint” via implementation of its 2023 Foreign Trade Policy (Bomassi & Nixon, 2025).

Talks between the EU and India resumed only in 2022 after a long gap of eight years due to a deadlock over market access in 2013. However, taking into account the tough road ahead, the eleventh round of EU-India FTA talks has been concluded, wherein the EU has sought significant tariff reductions. India is expecting that its export competitiveness to the EU is most likely to increase following finalisation of the EU-India FTA (Times of India, TOI Business Desk, 2025).

A total of 23 policy areas is being covered as part of the EU-India FTA negotiations, and a phased strategy has been adopted in line with India’s previous trade pacts with Australia and ongoing discussions with the United States. Speaking on the utility of this strategy, Commerce Secretary Sunil Barthwal stated: “If some of the issues which may not be very core to the trade, maybe taking some more time, then it is better to focus on core trade issues. So, we say that first things first… We are also discussing with the EU what can be the early harvest of the first tranche, where we can do faster” (Business Standard, 2025). The fourteenth round of negotiations on the EU-India FTA took place in the first week of November 2025 wherein “key outstanding issues were reviewed for positive resolution” and it was resolved to expedite and hasten the endeavour towards arriving at “a balance trade agreement” by the end of this year (Financial Express, 2025).

The EU-India relations are clearly at a juncture that exhibits urgency on the part of both sides to tie the loose ends owing to the changing global economic and geopolitical landscape.

The way forward

It is indeed an established fact that the EU and India are “unions of diversity” and share common values like democracy, rule of law, and human rights (Seconded European Standardisation Expert in India, 2025). The EU motto of “United in Diversity” represents “the legal and political balancing act between the uniform application of EU law and respect for member states’ peculiarities” (Thym, 2025), which leads to convergence of cultural values across the EU (2019), leading in turn to “unity and multicultural coexistence” (Basaraba, 2023). Unity in Diversity in India refers to “unity without uniformity” and “diversity without fragmentation” (Singh, 2015, pp. 62–84). The recent methods adopted to study and comprehend diversity in India include the application of “measurable indices (e.g., religious, linguistic, caste diversity) to track inclusion and development disparities and highlighting diversity management” (Biswas, 2022). The EU and India thus share some similar foundations which have been built “upon recognition and institutional management of immense internal diversity, reflected in their federal structures, constitutional protection of minority rights, and democratic accommodation of difference” (Dan & Maxim, 2016). Therefore, there is no rhyme or reason whatsoever for the relationship not to blossom and bloom.

The mid-year report on the World Economic Situation and Prospects (WESP) 2025, released by the United Nations, states in no uncertain terms that the Indian economy stands out when compared to other global players and will see a growth of 6.3% in the current fiscal year despite the dark clouds looming over the world economy (Business Today Desk, 2025). Thus, an alliance of the EU and India is certainly well-matched. The partnership holds a lot of promise if both sides focus on learning from each other and manoeuvring their mutual equation for accruing gains both separately and jointly.

It is also common knowledge that the economic angle is the real force driving the EU-India partnership (Vanleeuw, 2025). The EU and India can certainly nurture their relationship in all other global fora, despite the fact that the impetus of the relationship is provided by the economic dimension. Both the EU and India find themselves surrounded by hostility and war-like situations. The European Commission President is known to have stated, in the context of the Russia–Ukraine war, that she shall seek help from the Indian Prime Minister Narendra Modi as she intends to intensify the campaign for enforcing sanctions on Russia (Sen & Srivastava, 2025).

India, however, is restrained in its views and actions because Russia is one of the most reliable, largest and key suppliers of crude oil and weapons to India. Besides, India claims that it gives credence only to sanctions imposed by the United Nations. However, the External Affairs Minister did say that India’s trade with Russia stands at around USD 12–13 billion, which “is at a very small level in comparison to European countries” (Asian News International, 2022).

India hosted the G20 Summit in 2023 and accomplished the insurmountable task of coming up with the G20 New Delhi Leaders’ Declaration, which was agreed upon unanimously by all the protagonists of the Russia–Ukraine conflict, including the United States, the EU and Russia. They resolved that “all states must refrain from the threat or use of force to seek territorial acquisition against the territorial integrity and sovereignty or political independence of any state” (Ministry of External Affairs, 2023, G20 New Delhi Leaders' Declaration, S. 3.2).

In a statement by the High Representative on behalf of the European Union on 8 May 2025, it was declared that the EU and its member states “unequivocally condemn the heinous terrorist attack in Pahalgam, Jammu and Kashmir on 22 April [2025] and the murder of innocent civilians. Terrorism can never be justified… every state has the duty and the right lawfully to protect its citizens from acts of terror” (European Council, 2025, May 8, Official Statement). Thus, the EU condoned the Indian response to terrorism unleashed by Pakistan. It is important that the “strategic” element of the partnership is activated and that the two sides adhere to fine balancing and avoid unnecessary conflict and hostility.

Strategic Partnerships “do not demand commitments to a partner’s disputes with other countries, and grant both partners the flexibility to continue political engagement and economic cooperation with their adversary” (Chaulia, 2024, p.135).

Furthermore, the EU looks upon India as a conduit for cultivating better relations with the Global South as well as with the Indo-Pacific, the Middle East and Africa, by means of counter-balancing a largely dominant and overpowering China (Panda, 2025). Ursula von der Leyen is known to have stated during her visit to India in February 2025 that: “This world is fraught with danger. But I believe this modern version of great-power competition is an opportunity for Europe and India to reimagine their partnership” (Le Corre, 2025, April 1).

Conclusions

Cooperation does exist between the EU and India. However, a significant upgrade in bilateral and multilateral engagement could be to the advantage of both, in a world increasingly dominated by the Sino-American rivalry. The EU and India should seize this opportunity and occupy the void created by the withdrawal of the active engagement of the United States on many fronts. Research and development in defence is another area where the EU and India should do their best to excel.

India and the EU’s interests and priorities are aligned despite the absence of geographical proximity. The Indo-Pacific is the new arena where the involvement of all significant international actors can be witnessed. Working in unison will not only be mutually beneficial, but it will also enable the EU and India to gain greater recognition as weighty, responsible and formidable stakeholders in the region.

It is high time that the "clean image" of the EU and India—derived from their normative foundations of European liberal democracy and India's non-aligned, Gandhian principles—is sought to be transformed into a "proactive" image in the international arena. Both realise that they have to be "vocal" and "visible" to remain relevant, as "non-involvement" and "neutrality" are no longer accorded an exalted status.

The EU and India could aim to set up effective mechanisms for problem-solving and for the purpose of setting and achieving mutually beneficial milestones and goals. They must utilise their creativity and innovativeness to accelerate each other’s progress in all possible domains.

An alliance between like-minded partners situated on different continents can be utilised in myriad ways in the unpredictable world order of today. However, while India and the EU share certain concerns in the present geopolitical outlook, the lack of proximity and hard economic differences make moving forward difficult – for good reasons.

 

 

Dr. Shreya Pandey is Assistant Professor of Political Science, St. Xavier’s College, Ranchi. She was formerly a Fellow at the Nehru Memorial Museum and Library, New Delhi (2017–2019). She has worked as Principal Researcher in several international projects on EU-India perception studies coordinated by the NCRE, University of Canterbury, New Zealand, and ASEF, Singapore, and sponsored by the European Commission. She is the author of India and the European Union: Perceptions of the Indian Print Media and Elites (2017).

Dr. Dhiraj Mani Pathak is Assistant Professor in the Department of Economics at St. Xavier’s College, Ranchi. He has over seventeen years of teaching experience at the undergraduate and postgraduate levels. His research interests include macroeconomic policies. He is a regular contributor to the Jharkhand Economic Survey Report, published annually by the Department of Finance, Government of Jharkhand, India and local newspapers and TV channels.

Photo by Navneet Shanu

 

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