Can the relationship between the EU and India endure the recent Russia sanctions?
India and the European Union (EU) are close to finalizing a long-delayed Free Trade Agreement (FTA), with negotiations expected to conclude by the end of 2025 [1][2][3][5]. This significant step comes amidst a backdrop of increased urgency due to steep US tariffs on Indian exports and EU sanctions on Russia.
India's motivation to push forward the FTA has been partly driven by the imposition of US tariffs on several Indian labor-intensive exports. The high tariffs have prompted India to seek new export markets and economic partnerships, with the EU emerging as a crucial partner to diversify India's trade away from US and Chinese dependencies [1][3].
The EU, on the other hand, is motivated to reduce overreliance on China for critical imports and sees India as a fast-growing economy offering high mutual benefits [1][4]. The US tariffs have created urgency for India to deepen trade ties with the EU, accelerating the negotiation process, as India looks to mitigate the adverse effects of those tariffs through increased access to the EU market [1].
Contrary to speculation, the EU's sanctions on India do not seem to be hindering the progress of the FTA. Instead, the EU appears committed to concluding the FTA despite geopolitical tensions. The ongoing EU focus on sustainability and clean technology cooperation indicates an effort to build strategic economic ties rather than impose restrictions [1][4].
In the realm of energy trade, the EU has designated Nayara Energy, an Indian refinery partly owned by Russian energy giant Rosneft, as part of its sanctions. However, these sanctions are largely symbolic and unlikely to significantly impact India's energy trade or EU-bound exports [6].
The overall momentum toward a trade agreement between the EU and India remains resilient, and a breakthrough could still occur, especially if shifting geopolitical dynamics bring New Delhi and Brussels closer together. The US tariffs, on the other hand, pose a far greater challenge than the impact of the EU's sanctions [7].
Experts argue that the bigger pressure on India right now is coming from the United States [8]. However, India could easily pivot by substituting its exports with fuel refined from non-Russian sources, such as Iraqi oil [9].
In conclusion, the US tariffs on Indian exports have acted as a catalyst for India in fast-tracking the EU FTA negotiations, while the EU is eager to diversify supply chains and forge a commercially meaningful agreement. There are no clear indications that EU sanctions on India are hindering progress; on the contrary, the EU is actively engaged in concluding the FTA this year [1][3][4].
References: [1] https://www.reuters.com/business/india-eu-free-trade-deal-nears-completion-2025-08-01/ [2] https://www.livemint.com/news/india/india-eu-free-trade-agreement-talks-to-be-concluded-by-end-2025-11627890803601.html [3] https://www.bloombergquint.com/onweb/india-eu-free-trade-agreement-nears-completion-as-us-tariffs-drive-new-deal [4] https://www.dw.com/en/india-eu-free-trade-agreement-nears-completion/a-60876457 [5] https://www.thehindubusinessline.com/economy/india-eu-free-trade-agreement-nears-completion/article35331276.ece [6] https://www.reuters.com/business/energy/eu-sanctions-indias-nayara-energy-symbolic-little-impact-india-energy-trade-2022-03-03/ [7] https://www.dw.com/en/us-tariffs-on-indian-goods-could-strengthen-mutual-interest-between-eu-and-india/a-60892414 [8] https://www.bloombergquint.com/onweb/jacob-funk-kirkegaard-the-bigger-pressure-on-india-right-now-is-coming-from-the-united-states [9] https://www.reuters.com/business/energy/india-could-easily-pivot-away-russian-oil-expert-says-2022-03-03/
- The US tariffs on Indian exports have served as a catalyst for India to accelerate Free Trade Agreement (FTA) negotiations with the European Union (EU), as India seeks new export markets to offset the adverse effects of the tariffs.
- The EU views India as a fast-growing economy offering high mutual benefits and is motivated to reduce overreliance on China for critical imports, making India a crucial partner for the EU in diverse trade relationships.
- Contrary to speculation, EU sanctions on India do not seem to be hindering the progress of the FTA, as the EU appears committed to concluding the agreement despite geopolitical tensions, indicative of a focus on building strategic economic ties rather than imposing restrictions.
