EU-India Partnership: A Window of Opportunity for Our Ambitions?

A Marriage of Convenience in a Troubled World

A rich, frank and detailed exchange (theEU-India Strategic Dialogue 2025 led by Institut Montaigne together with the EUISS and the Ananta Aspen Centre) conducted in Brussels last month with key participants from India and the European Union (EU) led to new thinking on how best to move forward with the relationship – which has undeniably been on an upward curve, but perhaps not to the level we need to achieve.  It included experts, officials and former officials, as well as representatives from the private sector.
 

However, economic connectivity and trade do not suffice to make the partnership truly strategic; solid steps must be taken within the defense and security domains under the EU umbrella. For this purpose, additional trust-building mechanisms around tech leakage and export controls must be put in place.

In these uncertain times, both India and the EU are facing simultaneous headwinds: the breakdown of free trade and the unravelling of the liberal international order. In addition, India as an increasingly dynamic power has begun to recalibrate its foreign policy -. As we write, it is extraordinary that India, a "comprehensive global strategic partner" of the United States, currently faces 50% United States (US) tariffs, half of which are secondary tariffs due to Russian oil imports. These US tariffs are currently higher than China’s despite Beijing’s breadth of Russian oil and gas imports. For its part, the EU has met with stonewalling from China on the huge imbalance of bilateral trade, and faces divisive tactics that have long been a feature of China’s diplomacy towards Europe. Much less expected in Brussels has been the fact that these same tactics have now also entered the American political and diplomatic handbook resulting in the asymmetrical  EU-US Tariffs and Trade Framework Agreement. The degree to which this agreement can be considered as ‘fair, balanced and mutually-beneficial’ for transatlantic trade and investment is doubtful.

Having issues in common with third parties helps to build convergence and common action. It is not enough to propel forward the EU-India relationship. Yes, India and the EU can hedge together, and we will come to that. But in what amounts to a global explosion of relations of strength, both India and the EU still have as an overriding priority to manage their own relations with the US - and also with China. Both are entangled in security, tech and digital relationships with the US. 

Substantial Disagreements as a Backdrop …

Although the EU’s economic interdependence with China runs much deeper than India’s, the Indian Army directly faces the world’s longest disputed land border with China’s PLA, which is 3,488km-long. This threat combined with Beijing’s meddling in India’s maritime backyard and across its smaller neighbours’ economic development is no small feat for New Delhi to manage. Much more needs to be done with regards to a better understanding on the Indian side of the EU’s Russia threat perception - including the implications of New Delhi’s participation in the recent ZAPAD exercises. Similarly, India’s threat perception of the risk of tech leakage to China via Pakistan is underrated in the EU’s playbook.

Both India and the EU are moving to what one might call multilateralism tempered by pragmatism. In fact, it is a choice by necessity of so-called minilateral and bilateral partnerships that simply cannot be all-inclusive. What can be achieved by Europeans or Indians, for example, through an IORA (Indian Ocean Rim Association) initiative when both Russia and China are Dialogue Partners in this grouping? How can the EU or India stick to WTO conformity in its new trade agreements when the world’s two top trading nation-states flaunt it? Similarly, doubts exist about a UNFCCC-led climate change regime after the US administration’s repeated withdrawal from the 2015 Paris Agreement.

For India, the diversity of Indian states’ competing interests and the need to acquiesce to rising new norms - decarbonization, digital and economic security- often mean that there are clashes among key domestic constituencies - sensitivity to immigration, data sovereignty and farming are good examples. 

India and the EU must therefore find recipes for common action, acting as force multipliers. One way is to preserve among themselves and with interested third partners common norms and rules that allow for free, trustworthy and reciprocal exchanges. The other way is to dig into common sectoral needs and complementarities. These often relate to skilled talent mobility, and concern strategic sectors, including the technological and dual-use domains. 

Recalcitrant but not insurmountable "contradictions"

Given India’s, and increasingly Europe’s quest for strategic sovereignty, and the huge size and complexity of both actors, it is futile to look for 100% convergence on issues. "Contradictions", as Chinese diplomacy used to say in a previous era, do not prevent strategic partnership, provided we know where one should agree to disagree. Indians and Europeans now understand that they need not agree on everything. Still, one must learn how to get there.

Part of this requires agreements that are not all-inclusive, trade and investments that are not as deep or normative-driven as previously envisaged. For example, European environmental and social standard requirements on India, which is categorized as a lower middle-income country by the World Bank. In addition, they run up against India’s ambition to become a developed economy by 2047. In the other direction, India should recognize a European red line when it comes to India’s effective support to Russia’s military and industrial complex now mobilized against Ukraine. The sanctioning of three Indian entities’ contribution to the technological enhancement of Russia’s defense sector in the EU’s 19th package of sanctions against Russia illustrates this point. Recognition of leading concerns and mutual compromises around these are needed.

Convergence on negative interests and views, such as countering China’s broad-based strategic and economic aggressiveness, or hedging against Washington’s new coercive tactics, is by far not enough. There are awhole lot of positive interests in common on which we can tap into towards scaling up the relationship. 

Digital Sovereignty: A Common Goal

The digital sector comes first- albeit with complexity. India has been slow to adopt (2023) and enforce its Digital Personal Data Protection Act (DPDPA). This would be the Indian equivalent to the EU General Data Protection Regulation (GDPR)-style regulation; the DPDPA acknowledges the importance of data sovereignty but remains more hesitant to endorse personal data privacy rights. New Delhi approaches data as a means to advance public interests, with state agencies directing that process. Today, India’s platforms, software and components’ development face a challenge to its digital norms from the US, just as the EU does in the struggle to preserve the Europe’s Digital Markets Act (DMA) and Digital Services Act (DSA)vis-à-vis the US hyperscalers. Both actors have largely veered away from Chinese procurement for security reasons - sharply so for India to begin with, more slowly but also decisively so for the EU.

Neither can do without the US platforms and AI giants; neither has the cash to bankroll huge data centers on the scale that both the US and China are contemplating either. Both the EU and India face the issue of cross-border flow data safety and placing safeguards on the unbridled use of social media. There should be a practical path for two of the world’s largest digital markets to negotiate with the US on common digital spaces with rules and to build complementary options in key technological domains: chips, data centers, AI, HPC and quantum computing. For both, a break with the so-called Magnificent Seven [Microsoft, Nvidia, Tesla, Meta, Apple, Alphabet et Amazon] is not a realistic option; neither can it be for US firms that have to renounce the Chinese market and compete with Chinese companies in third countries. Together, the EU and India may call off some Washington bluff and regain much needed digital sovereignty.

In addition, there is broad scope for EU-India collaboration on know-how transfer for Digital Public Infrastructure (DPI), for AI towards public goods and for the promotion of joint public and private investment. The EU’s new integrated Business Tech offer for partner countries is part of its International Digital Strategy. This development is much welcome by the Indian digital ecosystem. European firms should seriously consider outsourcing to Indian-based back-office and knowledge creation research services - much like the US corporate giants, via the so-called Global Capability Centers (GCCs). India hosts 45% of the world’s GCCs.

High Value-Added Trade

Trade between the EU and India is almost entirely in value-added items. The onus here is on India. There is a strong argument for India to improve its ‘Ease of Doing Business’ (EoDB) index to attract more FDI. This should be accompanied with an improvement in public procurement processes, Intellectual Property (IP) rules and tax regimes. The EU, for its part, can recognize that if it wants decarbonated, environment-compatible goods from India, it must support the financing of local industry in this respect. The same may be true of the sensitive immigration issue, where the onus is on Europe. The EU faces a real challenge in shifting the narrative to a positive one around immigration based on real needs of skilled labor. Unfortunately, the public discourse around immigration does not distinguish between skilled and non-skilled labor. In addition, it is for EU Member States to take on the operational cost of immigration and pay the political price, despite the tacit acknowledgement at EU institutional level of the need for skilled mobility towards Europe.

Notwithstanding, Indians received the highest number of EU Blue Cards in 2021, while a dedicated EU Cooperation Framework on Migration and Mobility with India is in the pipeline. In addition, Multipurpose Legal Gateway Offices will be set up jointly with interested Member States in 2026 in sectors of shared interest with partner countries, including in the bioeconomy and ICT sectors, particularly relevant to Indian talent.

Defense: the Need to Strengthen Efforts

In spite of a very strong French contribution, overall defense and security remain weaker: this will take time. Trust must be reinforced through confidence-building measures; mutual fears of tech leakage remain. To reach a truly strategic partnership, the defense aspect needs solid strengthening. It is ironic that the US and India have just signed a 10-year defense pact on tech and intelligence sharing despite the ongoing strained trade ties.

While much headway has been made at the level of India and certain Member States, this is yet to happen under the EU overarching umbrella. India diversifying away from Russian weaponry, by choice and by necessity, will not stop at France. It is now ramping up defence co-production with Germany, Spain, Italy and with the UK as well. New Delhi’s bargaining strategy is no longer confined to a ‘Make in India’ imperative: India knocks at the door of the EU’s new €800 billion multi-year defense procurement initiative. South Korea’s leading example with Poland is a role model for India, which wants to make a conversion from exporting Soviet era material to Armenia to a significant role as a supplier and co-producer vis-à-vis Europe. India would be further interested in joining the PESCO initiatives in the future. The signing of a Security of Information Agreement (SoIA), already in the pipeline, remains an inevitable steppingstone in this regard. Both actors seem ready to upgrade cooperation in maritime security, and space seems to be a favored next step forward. For this to progress smoothly, confidence-building measures must be taken around dual-use technologies.

But both regions also face the political risk of involution into defensive moves that have popular appeal. If time slips by, these risks will grow and perhaps end the window of opportunity that we now see in front of us.

Copyright image: Money SHARMA / AFP