EU chief's meetings in India to boost efforts to sign Free Trade Agreement amid Trump tariff threat

New Delhi, Feb 28: After US President Donald Trump's threat to hit the European Union (EU), a 27-member bloc, with 25 per cent tariffs, a meeting between the top leadership of India and the EU on Friday is expected to give fresh push to efforts to seal an ambitious free trade agreement (FTA). European Commission President Ursula von der Leyen arrived in New Delhi on Thursday and will be joined by 20 members of the EU's 27-strong College of Commissioners their first such collective visit to any major country after getting a new mandate last year.

The delegation will meet Prime Minister Narendra Modi and key Cabinet members, including External Affairs Minister S. Jaishankar, Commerce Minister Piyush Goyal and Finance Minister Nirmala Sitharaman. "In an era of conflicts and intense competition, you need trusted friends. For Europe, India is such a friend and a strategic ally. I'll discuss with @narendramodi how to take our strategic partnership to the next level," she said on X soon after she was received at Delhi airport by Minister of State Anupriya Patel. Von der Leyen set the tone for the visit by describing India as a "strategic ally" at a time of intense geopolitical competition.

India may flag with the EU the imposition of non-tariff barriers such as a carbon border tax and deforestation regulations, people aware of the development said, pointing to the impact these could have on Indian micro, small and medium enterprises (MSMEs). The EU has said a key objective of its trade negotiations is removing barriers and helping European companies, particularly smaller firms, to export more. In the same spirit, it must reciprocate by removing trade barriers on Indian firms, especially MSMEs, the people said, requesting anonymity.

Trade issues are set to figure in both the meeting between PM Narendra Modi and Von der Leyen and Piyush Goyal and EU trade commissioner Maros Sefcovic, who will hold talks in Mumbai on Saturday to lay the groundwork for the 10th round of FTA negotiations scheduled for Brussels during March 10-14 the first talks after a six-month gap since the ninth round held in in New Delhi last September.

Hours before Von der Leyen's arrival, Trump said he planned to hit goods made in the EU with 25 per cent tariffs, claiming the bloc was created to "screw the United States". At an appearance with members of his cabinet, Trump said: "We'll be announcing it very soon. It'll be 25 per cent generally speaking and that will be on cars and all other things." The EU said it would react "firmly and immediately against unjustified tariffs".

Von der Leyen began her second mandate (2024-29) on December 1 with a new team of commissioners. Ahead of her New Delhi visit, an European Commission statement emphasised the importance of strengthening ties in key areas vital to the prosperity and security of Europe and India. "In this era of intense geostrategic competition, Europe stands for openness, partnership, and outreach. We seek to deepen ties with one of our most trusted friends and allies India," the statement quoted her as saying.

"Europe and India are like-minded partners, bound by the shared conviction that democracy best serves the people. We are committed to strengthening our strategic partnership to advance trade, economic security, and resilient supply chains, along with a common tech agenda and reinforced security and defence cooperation," she added. New Delhi wants issues such as the Carbon Border Adjustment Mechanism (CBAM) or deforestation regulations to be discussed in subject-specific forums rather than mixing them with trade and using them as import barriers.

The Indian side believes CBAM is a form of tax that can lead to tariffs of up to 35 per cent on imports of high-carbon goods such as cement, aluminium, fertilisers, chemicals including hydrogen, iron and steel from India. The second ministerial meeting of the India-EU Trade and Technology Council (TTC), established in 2022 to oversee cooperation in digital technologies, green technologies, trade, and resilient supply chains, will also be held on Friday. The Indian side will be represented by EAM Jaishankar, Piyush Goyal, and Electronics and Information Technology Minister Ashwini Vaishnaw. The EU has so far established a TTC with only two countries: India and the US.

Collaboration on telecommunications, 6G, artificial intelligence and semiconductors are among the matters expected to feature in the TTC meeting. “This is a very important partnership for both sides,” a senior official of the external affairs ministry said. “Cooperation has intensified and there is a positive intent to work towards concrete outcomes.”

Defence and security cooperation, especially greater coordination between the Indian Navy and navies of EU member states in regions such as the Red Sea and joint exercises, has emerged as another important pillar of the partnership. The two sides are discussing a proposed agreement on information security that would allow India to participate in EU-led defence projects. As part of efforts to bolster defence ties, the EU will depute a liaison officer at the Indian Navy’s Information Fusion Centre-Indian Ocean Region (IFC-IOR), established in Gurugram in 2018 to track shipping and critical developments in the region.

Von der Leyen began her visit by paying homage to Mahatma Gandhi at Rajghat. After meeting her on Thursday evening, Jaishankar said on X: "Appreciate her thoughts on re-energizing India’s engagement with Europe. The wide-ranging participation of Indian Ministers and EU College of Commissioners during this visit stands testimony to the importance we place on deeper India-EU ties."

While the EU side is expected to bring up the Russia-Ukraine conflict and the enforcement of sanctions related to trade with Russia, the external affairs ministry official said New Delhi had made it clear that a solution can only be found by bringing Russia and Ukraine to the negotiating table. "As for sanctions, we aren't violating UN sanctions or any multilateral regimes. We are open to discussion with the EU on this issue and have sought more details," the official said, referring to the EU slapping sanctions on five Indian entities for supplying sensitive technologies and components to Russia.

The EU is India's largest trading partner in goods, with bilateral goods trade surpassing $137 billion in 2023-24 and services trade worth over $51 billion. Trade between the partners has increased 90 per cent in the past decade, with Indian exports to the EU valued at $76 billion in 2023-24. India's cumulative FDI inflows from EU from April 2000 to September 2024 totalled $117.4 billion (16.6 per cent of total FDI equity inflows), while India's FDI outflows to the EU were worth $40.04 billion from April 2000 to March 2024. The FTA negotiations were first launched in 2007 and suspended in 2013 due to "a gap in ambition". Talks resumed in 2022 after the India-EU Summit in May 2021.