Strengthening the EU-India Relationship

The EU is seeking new trade partnerships across the globe given the uncertainty over U.S. President Donald Trump’s trade policy — and to decrease Europe’s economic dependency on China.

The EU is India's largest trading partner, accounting for approximately €124 billion worth of trade in goods — or 12.2% of total Indian trade.

The EU is the second-largest destination for Indian exports (17.5%) after the United States (17.6%). China only ranks fourth (3.7%).

India is the EU’s 9th largest trading partner, accounting for 2.2% of the EU's total trade in goods. This is well behind the United States (16.7%), China (14.6%) and the UK (10.1%).

However, trade in goods between the EU and India has increased by almost 90% in the last decade.

Trade in services between the EU and India reached €59.7 billion in 2023 — up from €30.4 billion in 2020.

Around 6,000 European companies operate in India — directly providing 1.7 million jobs and indirectly supporting 5 million jobs.

The EU's share in foreign investment stock in India reached €108.3 billion in 2022 — up from €82.3 billion in 2019 — making the EU a leading foreign investor in India.

While this is significant, it is below EU foreign investment stocks in countries like China (€247.5 billion) and Brazil (€293.4 billion).

India and the EU will push to finalize a Free Trade Agreement this year. A Free Trade Agreement between the EU and India would be the largest of its kind in the world, connecting a market of approximately 450 million with one of approximately 1.4 billion people.

There are hurdles to overcome. The EU aims for tariff elimination on 95% of its exports, including sensitive sectors like agriculture and automobiles. India is willing to open only 90% of its market.

India regards the EU’s carbon border adjustment mechanism (CBAM), deforestation rules and supply chain laws as non-tariff barriers.