In 2025, a prime focus lies in strengthening the India-Europe relationship.
The European Union (EU) is a political and economic union of 27 countries. It promotes cooperation, stability and prosperity. After World War II, leaders sought peace through economic and political integration. The Treaty of Rome (1957) created the European Economic Community (EEC) to ensure the free movement of goods, services, capital and people. The Maastricht Treaty (1993) transformed the EEC into the EU, expanding cooperation to political and security issues. The euro, introduced in 1999, is now the official currency of 20 member states. In 2016, the UK voted to leave the EU in the Brexit referendum.
India and the EU are two of the world’s largest economies with significant trade and investment opportunities. The EU is India’s largest trading partner and India is the EU’s 9th trading partner in goods. In 2023, the total value of EU-India trade in goods was €113.3 billion. India exported goods worth €64.9 billion to the EU while it imported goods worth €48.4 billion from the EU. This resulted in a trade surplus of €16.5 billion for India. The main EU exports to India are machinery, aircraft, spacecraft, electrical machinery and equipment. The main imports from India to the EU are machinery, transport equipment and chemicals.
Bilateral trade in services has seen steady growth reaching €50.7 billion in 2022. The EU exported services worth €23.9 billion to India and imported services worth €26.8 billion from India resulting in a balanced trade in services. India had a surplus of €2.9 billion in services trade. Telecommunications, computer and information services along with transport services accounted for over 65% of the EU’s services exports to India and around 45% of the EU’s services imports from India.
The EU is a leading investor in India contributing 17% (€8.4 billion) of India’s total FDI inflows in 2022. The EU also accounted for 21% (€108.3 billion) of India’s FDI stock in the same year. Close to 4,500 EU companies in India employ 6.7 million people (directly and indirectly).
India's rapid economic growth over the last decade has made it the 5th largest economy in the world. With over 1.4 billion people, including a thriving middle class, India remains an attractive destination for investments. The EU, as the world’s second-largest economy, with a population of around 450 million, offers high purchasing power and a significant market for goods and services.
The EU aims to ensure a transparent, open, non-discriminatory and predictable regulatory environment for EU companies investing and trading in India. Both parties are committed to strengthening the rules-based multilateral trading system and promoting free and fair trade. The EU-India Free Trade Agreement (FTA) negotiations were relaunched on 17 June 2022. The FTA seeks to remove tariff and non-tariff barriers, open up services and investment markets and enhance trade and sustainable development. The Investment Protection Agreement will provide a secure investment environment for investors from both regions. The Geographical Indications (GIs) agreement will offer better protection and business opportunities especially for SMEs manufacturing niche products.
In 2023, the EU and India set up the Trade and Technology Council (TTC) to deepen strategic engagement and cooperation. The TTC consists of three working groups focusing on strategic technologies, digital governance, green energy technologies and resilient value chains.
Science, Technology & Digitisation
Cooperation on research and innovation between the EU and India takes place through the Horizon Europe program (2021-2027). This initiative offers open calls for proposals to non-EU countries. The EU-India Strategic Partnership has research and innovation as a key focus with Roadmap 2025 detailing 20 actions on this front. The Global Approach to research and innovation aims to address global challenges and support India’s sustainable modernisation.
The EU-India cooperation is governed by the Agreement for Scientific and Technological Cooperation, first signed in 2001 and renewed every five years with the latest renewal in 2020. The EU-India Strategic Partnership Roadmap to 2025 includes research and innovation actions focusing on health research, digital technologies, green technologies and polar sciences. It also emphasizes mobility for scientists and strengthening innovation by connecting start-ups.
The EU-India Connectivity Partnership (2021) encourages people-to-people mobility including students and researchers. The EU-India collaboration will focus on key areas such as green transition, digitalization and global health challenges. The Trade and Technology Council (TTC), launched in 2023, further strengthened this cooperation particularly on issues like wastewater management, plastic litter and recycling e-vehicle batteries.
Indian entities can participate in Horizon Europe but they are not automatically eligible for funding. They must bring their own funding to projects. However, they can receive EU funding through Marie Skłodowska Curie Actions and the European Research Council. The EU also provides co-funding opportunities for Indian participants through various implementing arrangements.
Several agreements support EU-India cooperation in science and technology. These include the Agreement on Scientific and Technological Cooperation (signed in 2001 and renewed in 2020), the Cooperation Agreement on fusion energy research (signed in 2010) and the Implementing Arrangements for researchers in STEM and Social Sciences. India is also part of the ITER project for nuclear fusion research.
For nearly 17 years, the India-European Union (EU) relationship revolved around Free Trade Agreement (FTA) negotiations. The potential economic and geopolitical impact of the world’s largest democracy collaborating with the EU, its largest trading bloc, cannot be overstated. However, a broader approach beyond trade negotiations is essential to strengthen ties.
Europe has expressed concerns over India's neutral stance on the Russia-Ukraine conflict and its ties with Moscow and Beijing. While these relationships have historical and economic roots, India's rivalry with China and its democratic ethos align it naturally with Europe and the U.S.
A consensus on the ‘No Limits’ partnership between Russia and China as a threat to global democracies can serve as a foundation for closer cooperation. Recognizing the interconnectedness of the Indo-Pacific and Atlantic regions is crucial.
Building stronger human connections is key to a robust partnership. With India set to become the world’s third-largest economy, the EU stands to gain economically and geopolitically by anchoring India in a global alliance of democracies.
EU-India leaders must finalize the Free Trade Agreement (FTA). It will reduce tariffs increase market access and unify regulatory standards.
Both sides should reduce trade barriers like lowering European goods tariffs and opening Indian IT and professional services.
They must address geopolitical issues and expand counterterrorism cybersecurity and conflict resolution efforts. Strategic exercises will strengthen security cooperation.
Collaborate on renewable energy health research and advanced materials to boost green technologies.
Focus on sustainable development and align on climate policy especially the Clean Ganga Project.
Promote research and innovation through joint projects in renewable energy health and materials science.
Encourage cultural exchanges and people-to-people connections via festivals art exhibitions and language courses.
Work together in global forums like the United Nations World Trade Organisation and G20 to tackle global challenges and support sustainable development and global security.
A practical and tangible relationship between India and Europe is essential for addressing global democratic challenges. By combining their strengths, India, Europe, and the U.S. can form an unstoppable alliance against autocratic powers, securing their collective future in the face of rising global threats.
© 2025 iasgyan. All right reserved