NEW DELHI — The EU and India have concluded trade talks on a free trade agreement, a senior Indian official told POLITICO.  “Official-level negotiations are being concluded and both sides are all set to announce the successful conclusion of FTA talks on 27th January,” Commerce Secretary Rajesh Agrawal told POLITICO.  Under the deal, India is expected to significantly reduce tariffs on cars and machinery as well agricultural goods such as wine and hard alcohol. “This would be a very good story for our agriculture sector. I believe we are aiming to start a completely new chapter in the field of cooperation in the automotive sector, in machinery,” EU trade chief Maroš Šefčovič told POLITICO. On trade in services, the trade chief said that sectors like telecoms, maritime and financial services were expected to benefit. “This is again something where also India is making groundbreaking steps to new levels of cooperation, because we are the first one with whom they’re ready to consider this cooperation,” he said.  The conclusion to the talks arrived as the EU leadership was on a three-day visit to India for a summit to boost trade and defense ties between New Delhi and Brussels.  With the talks between the two sides having been on and off since 2007, the pact comes at an ideal moment as New Delhi and Brussels battle steep tariffs from the U.S. and cheap goods from China. 

European Commission President Ursula von der Leyen warned Washington to keep its hands off Greenland and said Europe’s response to U.S. President Donald Trump’s threats would be “unflinching.” In a wide-ranging speech at the World Economic Forum in Davos, von der Leyen said the self-ruling Danish territory’s sovereignty is “non-negotiable,” despite Trump’s repeated promises to purchase or annex it. “Our response will be unflinching, united and proportional,” von der Leyen said, adding the EU would show “full solidarity” with Greenland and was planning a “massive” increase in European investments in the island. Trump vowed over the weekend to inflict punishing tariffs on six EU countries, the U.K. and Norway over their opposition to his Greenland grab. He said an additional 10 percent tariff would enter into force on Feb. 1 unless Europe hands over the Arctic island.  The EU is internally divided on how best to respond to the American president’s saber-rattling, with France requesting the EU deploy its Anti-Coercion Instrument, or trade bazooka, to cut off U.S. firms from the bloc’s single market, while other capitals have urged restraint and dialogue.  In a veiled rebuke to Trump, von der Leyen singled out “the people of the United States” as Europe’s friends, calling on Washington to respect the trade deal it struck with the EU last summer in Scotland, which set a tariff ceiling of 15 percent on most European exports.  “In politics as in business: a deal is a deal. And when friends shake hands, it must mean something,” she said, adding Trump’s proposed new tariffs were a “mistake.” And with Trump dramatically rewriting the transatlantic alliance, “Europe needs to adjust to the new security architecture and realities that we are now facing,” von der Leyen said, adding the “old order” is dead. Von der Leyen also used the speech to display the EU’s network of friends across the world, at a time when Washington is withdrawing from the multilateral order.  Adapting to the new order means forming a raft of new trade alliances, from the Mercosur bloc in South America, which last weekend finalized a trade deal with the EU to create a sprawling free-trade zone, to Mexico, Indonesia and India, she argued. Brussels and New Delhi still have “work to do,” von der Leyen conceded, just as the two sides are supposed to shake hands when she travels to India in the coming days.  “But we are on the cusp of a historic trade agreement,” she said, describing it as the “mother” of all trade deals. “The point is that the world has changed permanently,” von der Leyen said. “We need to change with it.”

Anchal Vohra is a Brussels-based international affairs commentator. On a smog-filled day in New Delhi, I watched as a few German cars struggled to navigate a massive traffic jam. A British SUV was also in the mix, trailing not so far behind. Last year, these foreign cars accounted for only 0.1 percent of India’s imports, with Germans in the lead and the British coming in a near second. However, British businesses have gained an edge ever since the U.K. and India inked a free trade agreement earlier this year, with India finally lowering its protectionist guard. Once this deal fully comes into effect, overall bilateral business is expected to grow by more than 50 percent in about a decade-and-a-half, as New Delhi slashes its car tariffs from 100 percent to 10 percent, and its tariffs on scotch from 150 percent to 40 percent over a period of 10 years — all despite the cost to its domestic industries. It also gains particular advantage for its textile sector, which was hard hit by U.S. President Donald Trump’s 50-percent tariff, removing tariffs on Indian textiles exported to the U.K. The EU, meanwhile, remains the single largest market in the world, with a much higher chance of growing its exports to a country packed with over 1.46 billion consumers. Yet, negotiations between New Delhi and Brussels are forever hitting roadblocks, even as negotiators shuttle between the two capitals to get a deal across the finish line — a deadline that’s now been postponed to Jan. 26. And as these talks continue, the bloc could stand to learn from the flexibility of its former member. According to an Indian official in New Delhi, granted anonymity in order to speak freely, the biggest barriers to an agreement are currently the EU’s insistence on greater market access in the politically sensitive agriculture sector, and its insistence on a carbon tax under the Carbon Border Adjustment Mechanism (CBAM). On top of all this, the bloc’s protectionist tendencies — displayed by its higher tariffs on steel and its recent decision to curb rice imports from India — are also unexpected hurdles. In contrast to this rigidity, India’s concessions in its deal with the U.K. emerged from the flexibility it was granted in the agriculture sector, which was largely insulated from British products, the official said. “For all its faults, [the U.K.] understands India and Indians better.” Nearly half of Indians depend on agriculture for their livelihood, and farmers make up a strong voting bloc that holds strong political clout. Back in 2021, farmer protests even forced Prime Minister Narendra Modi to withdraw agricultural reforms and apologize. In fact, I have been told by former Indian officials and experts that the U.S. tariffs on India weren’t punishment for the country’s purchase of Russian oil, as Trump has claimed, but rather for its refusal to let U.S. food products flood the country. Nearly half of Indians depend on agriculture for their livelihood, and farmers make up a strong voting bloc that holds strong political clout. | Jagadeesh Nv/EPA “The interests of our farmers are top priority. India will never compromise on the interests of its farmers, dairy farmers and fishermen,” Modi had said at the time. But these same differences now threaten the EU-India relationship before it even properly takes off. “The Europeans could learn from the British,” the Indian official noted. “They excluded dairy, chicken and apples from the deal,” he explained, listing products particularly important to India. “In exchange, we let them bring in salmon, cod and lamb.” He also alluded that India could consider dropping tariffs on cars and wine if the bloc kept out of agriculture: “In liquor, luxury cars and wine, there is always room, since that doesn’t affect our most vulnerable people.” Instead of any such changes,, however, India is now growing peeved by what it sees as last-minute pressure tactics by Brussels. Just this month, the EU decided to “limit rice imports from India” and other Asian countries to the benefit of domestic rice growers and millers. And the bloc’s unexpected decision to spike tariffs on steel imports outside its quota to up to 50 percent has rattled Indian negotiators. New Delhi was already opposed to the EU’s incoming carbon tax, believing it would make its steel exports uncompetitive. The Secretary of India’s Ministry of Steel Sandeep Poundrik described the European carbon tax as a bigger threat to Indian exports than Trump’s tariffs. On top of all this, the bloc’s protectionist tendencies — displayed by its higher tariffs on steel and its recent decision to curb rice imports from India — are also unexpected hurdles. | Piyal Adhikary/EPA Moreover, some experts like former trade negotiator for India Sangeeta Godbole argue the EU stands to gain more from an FTA whereas India stands to lose if the carbon tax provision isn’t reconsidered. “Nearly 80 percent of Indian exports to the EU even now face miniscule tariffs below 1 percent,” she noted recently, demanding India shield exports “from excessive environmental rules” the EU is trying to impose. To that end, the country has decried the bloc’s tax on carbon intensive imports via CBAM as a violation of the Common But Differentiated Responsibilities (CBDR) principle, which doesn’t hold developing countries equally responsible for climate change due to differences in historical contributions and the state of their economic development. And here, too, India argues, the understanding with the British could be emulated. Although it failed to gain an exemption on the U.K.’s version of the carbon tax, India has reserved the right to retaliate if the FTA’s benefits are negated by this tax. For its part, the EU claims the carbon tax is intended to encourage the use of clean energy in heavy polluting industries. And as Commissioner for Trade Maroš Šefčovič said back in September: “We also need an understanding from the Indian side that we also have our constituency, we also have our audience” to consider — especially after the farmer protests over the recent deal with Mercosur nations. Meanwhile, the EU is also concerned about whether a deal with India might end up benefiting China. The bloc is desperately trying to reduce its dependence on Beijing in strategically important sectors and hoping India could replace it, but India itself is heavily reliant on China as well — for example, nearly half of the components in Indian semiconductors are imported from there. It also gains particular advantage for its textile sector, which was hard hit by U.S. President Donald Trump’s 50-percent tariff, removing tariffs on Indian textiles exported to the U.K. | Divyakant Solanki/EPA However, speaking with a highly placed EU insider who was granted anonymity, I learned the bloc is now ready to make concessions, offering to jointly manufacture cars to encourage India to lower its tariffs, to leave out access to certain agricultural products, and to possibly even relent on garment duties. And last week, negotiators went through sector by sector once more, trying to get a better deal for their domestic industries, trying to keep the balance sheet even. The truth is, India — home to a large number of people living below the poverty line despite its rapid economic growth — needs an FTA with the single largest market to attract foreign investment. But the EU needs India too.

BRUSSELS — The EU wants to boost cooperation with India, including on defense — just as U.S. President Donald Trump pressures it to slam New Delhi with massive tariffs over its enablement of Russia’s war in Ukraine.   “The growing complexity of global security threats, rising geopolitical tensions, and rapid technological change underscore the need for closer EU-India dialogue and cooperation in security and defence,” the European Commission said in a communication published Wednesday.  In a likely bid to appease Trump and those who criticize greater cooperation with one of Russia’s closest allies, the Commission added a caveat that India should stop helping Russia circumvent sanctions. “It is of utmost importance to the EU that any enablement of the war be curtailed,” the communication reads.  The statement adds that Brussels will engage with India on all aspects of countering Russia’s war in Ukraine, including preventing the re-export of battlefield items of EU origin to Russia, and “sanctions circumvention, including through Russia’s shadow fleet and other energy measures.”  Meanwhile, India sent 65 troops to join the annual Russian military exercise Zapad last weekend, where the Kremlin simulated a nuclear attack on NATO countries. On Prime Minister Narendra Modi’s recent visit to a summit in China, he held hands with Putin as they approached their host, President Xi Jinping. “Participating in military exercises, purchase of oil, all these are obstacles to our cooperation when it comes to deepening the ties,” the EU’s chief diplomat, Kaja Kallas, said at a press conference in Brussels on the EU-India Strategic Agenda.  However, she warned that if the EU doesn’t stand ready to engage with India, hostile powers will fill that gap. “The question is always whether we leave this void to be filled by somebody else or try to fill it ourselves,” she said. As part of its 19th sanctions package, the EU is considering targeting countries that aid Russia in circumventing sanctions — including India, which is among the top buyers of Russian oil and coal.  The EU has already sanctioned a partly Russian-owned refinery in India, meaning that the facility can no longer export to the bloc. AN UNPREDICTABLE U.S. The communication shows that Brussels finds itself in a rather tricky geopolitical arena: Aiming to ramp up cooperation and seal a free-trade agreement with India by the end of the year, while hoping to diversify trade away from the U.S. and an increasingly unpredictable White House. At the same time, Brussels won’t find it easy to remain a credible threat to Russia while doing more business with a country that has historical and ongoing close ties with Moscow.   An EU official, speaking after being granted anonymity to discuss closed-door discussions, admitted that New Delhi and Brussels “have differences” when it comes to Russia’s war on Ukraine.   “It’s not all joyous music and singing and dancing. There is an acknowledgement that we need to do more to bridge gaps,” the official added, pointing to sanctions and “the oil front.” And yet, Brussels is counting on the world’s most populous country for its diversification push. The communication follows Commission President Ursula von der Leyen’s visit to India at the start of the year, taking her full roster of commissioners with her. Last week, the EU’s trade commissioner, Maroš Šefčovič, again spoke highly of India during his third visit to the country this year. He reiterated that the trade talks would be finalized before the end of 2025.

Listen on * Spotify * Apple Music * Amazon Music Wer regiert die Welt – und was treibt sie an? In unserem Sommer-Spezial geht es um die mächtigsten und umstrittensten Politikerinnen und Politiker unserer Zeit. Wir zeigen, wie sie denken, entscheiden – und was das für uns bedeutet. Ein Politiker pro Tag, ein Blick hinter die Kulissen der Macht. In der Machthaber-Serie: 04.08.2025 – Wladimir Putin 05.08.2025 – Marine Le Pen 06.08.2025 – Javier Milei 07.08.2025 – Xi Jinping 08.08.2025 – Giorgia Meloni 11.08.2025 – Recep Tayyip Erdoğan 12.08.2025 – Benjamin Netanjahu 13.08.2025 – Friedrich Merz 14.08.2025 – Narendra Modi 15.08.2025 – Mohammed bin Salman 16.08.2025 – Ursula von der Leyen Das Berlin Playbook als Podcast gibt es jeden Morgen ab 5 Uhr. Gordon Repinski und das POLITICO-Team liefern Politik zum Hören – kompakt, international, hintergründig. Für alle Hauptstadt-Profis: Der Berlin Playbook-Newsletter bietet jeden Morgen die wichtigsten Themen und Einordnungen. Jetzt kostenlos abonnieren. Mehr von Host und POLITICO Executive Editor Gordon Repinski: Instagram: @gordon.repinski | X: @GordonRepinski.