ISAS Briefs

Summary

The European Union’s latest strategy document on India marks a definitive moment in the evolution of New Delhi’s relations with Brussels – long defined by mutual neglect. This began to change in the 21st century but the two sides struggled to move from promise to performance. In the last few years, however, there has been a determined effort to plug that gap. Troubled by the geopolitical assertion of Russia, the muscular economic policies of China and the disruption of historic United States alliances under President Donald Trump, Europe is rethinking its approach to the world and rebooting relationships with other powers. Its new outreach to India is part of that effort.

Unveiled on 17 September 2025 as a Joint Communication to the European Parliament and the European Council, the European Commission outlined a “comprehensive strategic agenda” to deepen, broaden and better coordinate cooperation with India across prosperity, security, technology, connectivity and global governance. In a new ambitious approach, the Commission affirmed that “India’s success benefits the European Union (EU), just as the EU’s success benefits India”, the document declares. This simple sentence signals a mental shift: Brussels now recognises New Delhi not just as a useful interlocutor but also as an indispensable partner in shaping the international order shaken to its core by the recent policies of the United States (US), Russia and China.

Trade is the linchpin of the new agenda. The EU is India’s second-most important commercial partner after the US. Bilateral goods trade has climbed to €120 billion (S$180.96 billion) and services to €60 billion (S$90.48 billion). Around 6,000 European companies operate in India, directly employing three million people and supporting millions more indirectly, making the EU one of India’s top investors. Yet, India still accounts for less than 2.5 per cent of the EU’s total trade – an untapped potential the Joint Communication highlights.

After years of drift, both sides are now focused like a laser on securing a far-reaching free trade agreement (FTA) that reduces tariff and non-tariff barriers and unlocks the enormous possibility of trade and investment flows. Negotiations, stalled for a decade, have gained unprecedented momentum since 2022 and are now in their “final stages”, which the two sides want to conclude by the end of 2025. The proposed agreement is quite broad, covering goods, services, investment protection, air transport, regulatory alignment and green finance.

For India, buffeted by a massive trade deficit with China and shocked by US President Donald Trump’s tariffs, free trade with the EU has become a major strategic objective. For Europe, diversification of supply chains and economic security after the twin shocks of COVID-19, the Russian invasion of Ukraine and the Trump shakedown, have made trading with India attractive.

The strategy’s second pillar is technology and innovation. India is already a rapidly expanding manufacturing and technology hub, hosting nearly half of the global capability centres. Europe brings world-class research, strong industry, robust regulation and expertise in green and digital technologies. The Joint Communication proposes EU-India Innovation Hubs – platforms bringing together policymakers, industry leaders, startups, investors and experts to identify shared priorities and catalyse innovation – and a new EU-India Startup Partnership. Priority areas include artificial intelligence, semiconductors and space technology.

Defence and security cooperation is the third pillar. The planned EU-India Security and Defence Partnership – flagged in the Joint Communication – will anchor cooperation on maritime security, crisis management, counterterrorism, cyber and hybrid threats and, crucially, defence industrial collaboration. Negotiations have begun on a Security of Information Agreement to allow the exchange of classified information – something the EU does only with its closest partners. The Joint Communication locates EU-India ties within a wider arc of connectivity and multilateral reform. It underscores joint investments in third countries, digital infrastructure, green hydrogen and sustainable mobility. Initiatives like the India-Middle East-Europe Economic Corridor are held up as models for collaborative connectivity. On the multilateral front, the EU and India commit to reforming global institutions – from the United Nations to the G20 – to make them more representative and fit for today’s challenges.

The shared ambition for a new relationship does not mean there are no problem areas. There is no doubt that the India-EU partnership is clouded by the impact of the Russia-Ukraine war and India’s continuing partnership with Moscow. The Joint Communication is careful but clear: “Russia’s war of aggression against Ukraine…poses an existential threat to European security. It is of utmost importance to the EU that any enablement of the war be curtailed.” Brussels openly warns that India’s oil imports and defence collaboration with Moscow could jeopardise or slow ongoing negotiations on the FTA and security cooperation.

And yet the underlying tone is accommodation, not confrontation. EU officials stress that Brussels does not intend to force India to “pick sides” but hopes to entice New Delhi with incentives – trade access, technology exchange and strategic partnership – rather than threats. This “entanglement strategy” reflects Europe’s recognition that India’s historical links with Russia run deep but can be gradually rebalanced. It also resonates with India’s own tradition of strategic autonomy and non-alignment.

Still, the inertia of India’s past attachment to Russia is beginning to produce political and economic costs with its most important economic and technological partner – the US and Europe. While New Delhi must maintain a productive relationship with Moscow, it has no reason to insert itself into the Ukraine war. That stance goes against the very grain of India’s non-alignment and its emphasis on territorial sovereignty. As the war in Ukraine escalates, India needs to recalibrate its position in favour of peace and a greater balance in its ties with Brussels and Moscow – reflecting the rapidly rising stakes in its relationship with the EU. If Russia represents an important partnership from the past, the engagement with the EU could be far more consequential in accelerating India’s global rise.

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Professor C Raja Mohan is a Visiting Research Professor at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore (NUS). He can be contacted at crmohan@nus.edu.sg. The author bears full responsibility for the facts cited and opinions expressed in this paper.

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