India–EU set for major reset with trade deal, defence framework at Jan 27 talks

India and the European Union are set to conclude a free trade agreement, a defence framework pact and a new strategic agenda at their annual summit on January 27, with Brussels looking to deepen its global engagement alongside New Delhi at a time of geopolitical volatility.

Top diplomatic sources told PTI that the free trade agreement to be finalised at the New Delhi summit will be a “living document” that can continue to be refined to address any remaining issues.

“India and the EU can set the agenda for global governance, along with France, in the absence of the US,” a senior EU official said. “India is one of the big players that we work with and can rely on.”

The proposed FTA is expected to bring the two sides closer across several sectors, as global trade continues to be affected by Washington’s tariff policy. The sources told PTI that issues relating to agricultural market access and alcoholic beverages have been resolved, with progress also being made on rules of origin clauses.

However, both sides are still working to identify “landing zones” on steel, cars, the EU’s Carbon Border Adjustment Mechanism, and certain regulatory mechanisms.

“The global environment is more volatile and hostile, and India and the EU desire to create predictability and integrate supply chains,” one of the sources said.

Twelve chapters of the FTA have been concluded. Negotiations have now moved from formal rounds to continuous engagement between New Delhi and Brussels to close the remaining eight chapters.

In September, Prime Minister Narendra Modi and European Commission President Ursula von der Leyen reaffirmed their commitment to finalise the deal by December.

The European Union is India’s biggest trade partner, with bilateral trade in goods reaching USD 135 billion in 2023-24. The FTA is expected to significantly boost the two-way trade relationship.

EU trade commissioner Maros Sefcovic is expected to visit New Delhi early in December to push negotiations on the pending chapters.

The summit will be held one-and-a-half months after New Delhi hosts Russian President Vladimir Putin. Brussels is expected to follow the India-Russia summit closely.

Top EU leaders will attend the Republic Day parade as chief guests on January 26, with the India–EU summit scheduled the next day. An official announcement on the summit and the Republic Day chief guest is yet to be made.

According to the sources, the EU aims to shape the global agenda with India heading BRICS and France chairing the G7 in 2026. Cooperation between India, the EU and France is expected to play a role in 2027, when China leads BRICS and the UK chairs the G20.

Alongside the FTA, the defence framework pact and the new strategic agenda, the January 27 summit will focus on broader global challenges.

“A multipolar world demands stronger multilateral cooperation, and in this global landscape, India stands out as a pivotal global actor and a natural strategic partner for the European Union,” President of the European Council Antonio Costa said.

“As we navigate this new era, I look forward to the next steps in elevating our partnership to new heights, including the finalisation of a mutually beneficial and economically meaningful free trade agreement,” he said.

Costa said the upcoming summit will provide an important opportunity to strengthen ties and promote prosperity, investment, innovation and sustainable growth through a new joint comprehensive strategic agenda.

He said the strategic agenda will lay the foundation for a forward-looking, ambitious, balanced and rules-based partnership.

“The EU and India are well-placed to advance shared priorities crucial for the future, including strengthening resilient and diversified supply chains, driving digital innovation, accelerating the green transition, and deepening cooperation on peace, security and defence matters based on the principles of mutual trust and respect,” he said.

The new strategic agenda identifies five areas of shared interest: security and defence, connectivity and global issues, prosperity, sustainability, and technology and innovation.

Beyond the bilateral dimension, the agenda highlights joint engagement on global issues and cooperation with third partners, reflecting India’s growing international profile.

Under the defence pillar, key areas for expanded cooperation include maritime security, cyber defence and counterterrorism.

The strategic agenda also emphasises enhanced regional connectivity efforts such as the India-Middle East-Europe Economic Corridor (IMEC), and advancing Global Gateway and EU–India trilateral cooperation in third countries.

(With inputs from PTI)