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New Delhi – European Council President Antonio Luis Santos da Costa and European Commission President Ursula von der Leyen will be honored as chief guests at India’s Republic Day celebrations next Monday, but the pomp and circumstance are just a backdrop for a far more pressing matter: finalizing a landmark free trade agreement with Asia’s third-largest economy.
A Geopolitical Pivot: EU and India Close In on ‘Mother of All Deals’
As geopolitical tensions rise and trade wars loom, both sides are eager to secure a deal that could reshape global commerce.
- India and the EU have been negotiating a free trade agreement for nearly two decades.
- The deal is seen as a strategic move for both sides,diversifying trade partners amid global uncertainty.
- Progress is being made, but sticking points remain, including carbon taxes and intellectual property protection.
- If finalized, the agreement would create a massive free market of two billion people.
What’s driving this sudden urgency for a trade deal? Both the European Union and India are seeking reliable trade partners as geopolitical threats create a volatile surroundings for commerce. For India, it’s about offsetting the impact of escalating tariffs imposed by the United States. For the EU, it’s about reducing its dependence on China, which is increasingly viewed as an unreliable partner.
The choice of von der Leyen and da Costa as Republic Day guests sends a clear signal,according to Chietigj Bajpaee of the London-based Chatham House think-tank: “it sends a signal that India maintains a diversified foreign policy… and that it is not beholden to the whims of the Trump management.”
Some reports suggest an announcement could come as early as January 27 during a high-level summit. Both von der Leyen and India’s Trade Minister Piyush Goyal have dubbed the potential agreement the “mother of all deals,” underscoring its importance after nearly two decades of difficult negotiations.
This pact would mark India’s ninth free trade agreement (FTA) in four years, following deals with the UK, Oman, New Zealand, and others. For brussels,it builds on recently concluded trade agreements with the Mercosur trading bloc,as well as Japan,South Korea,and Vietnam.
“Both sides now seek reliable trade partners, as threats arising out of the geopolitics have created a tumultuous environment for commerce. the urge is equally strong – for India to offset US tariff issues, and the EU to offset trade dependence on China which it considers unreliable,” says Sumedha Dasgupta, senior analyst at the Economist Intelligence Unit.
The deal would also represent a “continuing and meaningful effort to shed India’s notoriously protectionist carapace,” Dasgupta adds.
However, the path to a final agreement isn’t without obstacles. For the EU, stronger intellectu