Ursula von der Leyen, President of the European Commission, expressed confidence in finalizing a free trade agreement (FTA) between the EU and India by the end of this year, despite the complexities involved. In her visit to Delhi, von der Leyen emphasized that while the negotiations would be challenging, the determination to achieve such a deal remained strong. If successful, the FTA would become the largest of its kind globally, potentially reshaping trade relations between the two economic powerhouses.

Accompanied by the College of Commissioners, Ursula von der Leyen met with Indian Prime Minister Narendra Modi on Friday, underscoring the desire to enhance collaboration in key areas such as semiconductors, AI, and cleantech. Talks for the FTA were revived in 2021, and another round of negotiations is slated for March, with an India-EU summit scheduled for later in the year.

Beyond trade, the EU and India are exploring a “Security and Defence Partnership,” aimed at boosting cooperation in security and stability—mirroring similar arrangements with Japan and South Korea. This partnership takes on greater significance as the EU looks to strengthen ties with the Indo-Pacific region, particularly amidst growing tensions with the US over issues like trade tariffs and the Ukraine conflict.

Former US President Donald Trump’s return to the White House has raised concerns, with his recent remarks suggesting tariffs on European Union goods, which could escalate transatlantic trade tensions. The EU has vowed a strong response to any unjustified tariffs, further highlighting the need for stronger trade and security relations with India.

However, progress on the FTA has been slow, with disagreements remaining in areas such as agriculture and manufacturing. Despite this, India’s trade relations with the EU have grown significantly, with bilateral trade reaching $135 billion in 2022-23. The EU is India’s largest trading partner in goods, and over 6,000 EU companies operate in India, signaling strong economic ties.

India, which has historically been cautious about free trade agreements, has become more proactive in recent years, engaging in negotiations with several countries and economic blocs. Just this week, India resumed free trade talks with the UK, and in 2022, it signed a $100 billion FTA with the European Free Trade Association (EFTA) after 16 years of negotiations.