India-EU trade deal and defense cooperation
By Victoria Waldersee
Overview of the trade agreement
NEW DELHI, Jan 21 (Reuters) – A historic trade deal between India and the EU is likely to be reached in the coming days, Spanish Foreign Minister José Manuel Albares said on Wednesday during a visit to New Delhi, presenting the deal as a security measure against economic coercion.
Potential economic partnerships
The deal, which follows a deal signed Monday between the European Union and Mercosur, would create the world’s largest free trade zone, a powerful signal as U.S. President Donald Trump imposes high tariffs on India and threatens to raise tariffs on Europe for refusing to support his plans to take Greenland against its will.
Defense Collaborative Initiatives
“Everything is going perfectly. We don’t expect any obstacles,” Albares said after bilateral meetings with Indian Foreign Minister Subrahmanyam Jaishankar and President Droupadi Murmu in Delhi.
“We must make it clear to the whole world that we believe in free trade and that we have the instruments of deterrence to protect us from any economic coercion,” Albares said.
European Commission President Ursula von der Leyen is expected to arrive in India on Sunday evening to finalize sticking points – mainly on carbon taxes and import duties for key sectors such as automobiles and steel – ahead of the EU-India summit on January 27.
Von der Leyen said the deal would create a market of 2 billion people, representing almost a quarter of global GDP.
Trade in goods between the EU and India has increased by almost 90% over the past decade, according to EU data, valued at 120 billion euros ($140.47 billion) in 2024.
Closer defense ties
Speaking to the Spanish delegation on Wednesday, Indian Foreign Minister Jaishankar said he saw “considerable potential” for more economic partnerships between the two countries, highlighting a shared commitment to building resilient manufacturing capabilities in defense.
A joint venture between Airbus and Indian conglomerate Tata Group to build C-295 jets in India is an example of the type of business relationship that should be replicated, Albares added.
The first Indian-made Airbus plane, produced at a joint factory with Indian conglomerate Tata Group in the western state of Gujarat, is expected to roll off production lines before September 2026, Jaishankar said, slightly ahead of schedule.
($1 = 0.8543 euros)
(Reporting by Victoria Waldersee, editing by YP Rajesh, Bernadette Baum and Sharon Singleton)
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