The EU–India economic partnership is at a critical inflexion point.  Due to the shifting geopolitical landscape, from renewed U.S. protectionism to an assertive China, deepening EU-India economic engagement has become a strategic imperative. Recent friction between the EU and Washington on various matters, including digital regulation, underscores the need to broaden strategic partnerships beyond the transatlantic sphere. India, facing steep U.S. tariffs on its goods, views Europe as a more reliable partner to support its export-driven growth. In 2024, the EU, one of India’s largest trading partners, accounted for €120 billion in goods trade. Meanwhile, India’s rapidly growing economy, projected to be the world’s third largest by 2030, offers a vast market for European businesses. Therefore, both the EU and India recognise that strengthening trade and investment ties is essential to diversifying their economic options and advancing a rules-based, multipolar global order.  

Deals, Data, and Decarbonization: Getting the FTA Right 

One immediate priority for Europe and India is the acceleration of the long-awaited Free Trade Agreement (FTA) by 2025, accompanied by a robust investment protection pact. After 17 years of intermittent negotiations, a balanced deal is finally within reach if both sides can resolve persistent market access frictions – ranging from tariffs on automobiles and spirits to the EU’s new sustainability rules, particularly the Carbon Border Adjustment Mechanism (CBAM). A fair, forward-looking FTA would help unlock untapped potential in two-way trade and investment, especially in digital services and green technologies. It should also provide strong protection for intellectual property and commit to sustainable development standards, giving businesses on both sides the predictability they need to deepen long-term investments. 

Alongside trade talks, the recently established EU-India Trade and Technology Council (TTC) needs to demonstrate its value by delivering not only dialogue but also concrete outcomes in technology, digital trade, and innovation. The high-level platform should align Europe and India on the rules and governance of emerging technologies – for example, setting common standards in artificial intelligence and 5G/6G telecommunications – as well as promote collaboration on semiconductors and other strategically important industries. The TTC should also work to harmonise regulations governing digital services and data flows that currently create barriers for technology firms. By focusing on deliverables, such as joint R&D projects or mutual recognition of certifications, the TTC can bolster digital trade and investment in tech sectors while enhancing supply chain resilience in ICT and electronics. 

Climate and trade policy is another such high-priority area where bilateral coordination is required for improved trade. India has consistently raised concerns that the CBAM, which imposes carbon levies on commodities such as steel, cement, and aluminium, is unfair to developing economies. The EU could address these concerns by phasing in CBAM for Indian exports, introducing transitional arrangements, or granting sector-specific exemptions while supporting Indian industry in its decarbonisation path. Notably, the EU-India TTC has a mandate to support India’s decarbonisation efforts through the National Green Steel Mission as part of a shared climate agenda. By marrying climate action with trade cooperation, the EU and India can avoid regulatory frictions and instead make clean technology a pillar of their trade partnership. 

Investment and innovation form the fourth pillar of the EU-India partnership. The EU is already a top investor in India, holding €140 billion in foreign direct investment stock in 2023. Still, regulatory hurdles in India – ranging from divergent standards to restrictive technical barriers – have often limited the scale of two-way investment flows. A reinvigorated EU-India High-Level Dialogue on Trade and Investment would help tackle these issues and ensure fair market access and stronger investor protections. Meanwhile, both sides could launch joint initiatives to connect start-ups, industries, and researchers in areas of green technology, biotechnology, and fintech – leveraging Europe’s innovation capacity alongside India’s vast talent pool. Finally, easing the movement of skilled professionals would support investment and knowledge exchange – for example, streamlining visas for Indian tech experts and European specialists to work in each other’s markets.  

Shared Strengths, Secure Futures: Securing the Next-Gen Economy 

If expanding trade and investment helps realise the growth potential of EU–India ties, then building resilient supply chains addresses their underlying vulnerabilities. Recent global shocks – from the pandemic to geopolitical tensions – have exposed the fragility of supply chains. The EU and India have responded with calls for “strategic autonomy” to reduce over-reliance on single suppliers, especially China. Working together on supply chain resilience will amplify these efforts; both sides can diversify their sourcing and ensure that key industries, from pharmaceuticals to electronics, are less vulnerable to disruptions. Indeed, supply-chain security has become a core focus of the EU-India strategic partnership, featured in high-level dialogues and the Trade and Technology Council agenda. 

First, supporting supply chain resilience in critical high-tech sectors, such as semiconductors, telecommunications, and pharmaceuticals, should be a shared priority for the EU and India. This could include partnering under Europe’s Chips Act and India’s semiconductor mission to develop alternative chip manufacturing hubs, reducing dependence on East Asia. The joint efforts might involve European chipmakers investing in India’s upcoming semiconductor fabs, sharing research, and encouraging the exchange of skilled talent in electronics design. Similarly, both partners can coordinate on telecom infrastructure – for example, promoting open 5G/6G networks – to avoid monopolisation by any single foreign vendor. Utilising the TTC’s working group on resilient supply chains, the EU and India can establish early-warning systems for component shortages and jointly develop standards for supply chain security in emerging technologies.  

In addition to high-tech, access to critical raw materials and green technologies is equally important. Both Europe’s clean energy transition and India’s industrial expansion heavily rely on minerals such as lithium, cobalt, and rare earths, as well as key green technologies like solar panels and batteries. To avoid overdependence on a few dominant suppliers, the EU and India should work closely to diversify their sourcing. India’s inclusion in the Minerals Security Partnership and its growing ties across Africa and Central Asia present opportunities for joint investment in mineral supply chains. An EU-India critical minerals agreement could facilitate cooperation in exploring, mining, and processing critical minerals, ensuring both partners have reliable inputs for the electric vehicle, renewable energy, and defence industries. At the same time, Europe can support India’s ambition to become a green manufacturing hub – for instance, by co-financing solar panel and battery production in India – thereby making supply chains for renewable energy equipment more distributed.  

Additionally, physical infrastructure is also foundational to building a resilient supply chain, making the strengthening of Europe-India connectivity and logistics networks essential. Major projects, such as the India–Middle East–Europe Corridor (IMEC), aligned with the EU’s Global Gateway initiative, will help establish secure alternative trade routes that circumvent chokepoints, including the Suez Canal. Both sides should invest in upgrading ports, developing smart rail freight corridors, and enhancing digital trade facilitation to accelerate and secure the flow of goods. Joint efforts in maritime security and protecting undersea data cables will also protect shipping lanes and data links. As the U.S. reduces global infrastructure financing, the EU and India can fill the gap by investing in connectivity across South Asia. Revitalising the 2022 EU–India Connectivity Partnership with flagship projects in transport and digital infrastructure will reduce risks, shorten supply chains, and integrate businesses into efficient production networks. 

Finally, the EU and India should leverage their partnership to foster global supply chain resilience. The EU and India should jointly promote supply chain resilience principles in international forums such as the G20 and the WTO. By sharing best practices and coordinating policies, they can help set global standards for transparency and diversification in supply networks. A dedicated bilateral task force or an annual dialogue on supply chain resilience could be established to continually assess vulnerabilities, as seen during pandemics or conflicts, and facilitate fast-tracking cooperative responses. Coordination with like-minded partners – for instance, through trilateral projects with countries such as Japan or Australia – can further expand alternative sourcing and reduce dependence on any single country. By joining forces on all the above fronts—trade, technology, supply chains, climate, and investment—the EU and India can create a more balanced, resilient partnership that supports their individual and shared development goals and helps shape a stable, rules-based global order amid growing challenges from US-China competition.   

(The author acknowledges the research assistance provided by Amritha Biju, Research Intern at ORF.)