India and the EU — a fit partnership in a divided world, Pg6

Key Highlights:

• European Commission President Ursula von der Leyen and European Council President António Luís Santos da Costa will be chief guests at India’s 77th Republic Day on January 26, 2026.
• The 16th India-EU Summit will be held on January 27, 2026, co-chaired by the EU leaders and Indian Prime Minister Narendra Modi.
• India and the EU are in the final stages of negotiating a Free Trade Agreement (FTA), ongoing since 2007.
• The EU is seeking a Security and Defence Partnership with India, similar to its partnerships with Japan and South Korea.

Detailed Insights:

• The India-EU relationship has been underperforming due to narrative wars over Russia and China, and a greater focus on their respective relationships with the U.S.
• A finalized FTA could provide major opportunities in textiles, pharmaceuticals, automobiles, digital trade, and services, acting as a geopolitical insurance policy.
• A key obstacle in the FTA negotiations is the EU’s Carbon Border Adjustment Mechanism (CBAM), which India views as a non-tariff barrier.
• A Security and Defence Partnership would provide the EU access to India’s defence market and opportunities for co-production of defence equipment, while supporting India's 'Make in India' initiative.
• The India-EU partnership can serve as a model for other nations seeking new partnerships amidst the unpredictability of the U.S. and assertiveness of China.
• Both India and the EU prioritize strategic autonomy, aiming to reduce over-dependence on specific countries and amplify their voices on the global stage.
• The partnership aims to foster a resilient, equitable, and sovereign multipolar order, respecting internal sensitivities and promoting flexibility and pragmatism.

Key Concepts Involved:

• Free Trade Agreement (FTA): An agreement between two or more countries to reduce or eliminate barriers to trade, such as tariffs and quotas.
• Carbon Border Adjustment Mechanism (CBAM): A carbon tariff on imports based on the carbon intensity of their production.
• Strategic Autonomy: The ability of a country or bloc to act independently in its foreign policy and security decisions, without undue external influence.