The durability of EU-India relations facing the recent Russia sanctions is uncertain
India and EU Advance Free Trade Agreement Amid US Tariffs and EU Sanctions
Negotiations for a Free Trade Agreement (FTA) between India and the European Union (EU) are progressing steadily, with a goal to conclude the deal by the end of 2025. The 11th and 12th rounds of talks were completed in May and July 2025 respectively, covering goods, services, investment, sustainability, and digital trade [1][2][4].
Despite the ongoing US tariffs and EU sanctions, no direct evidence suggests that these external factors are currently hindering the India-EU FTA progress. However, global trade volatility and the need for supply chain resilience, particularly in clean energy sectors, are influencing trade priorities [3].
The US has imposed tariffs of up to 50% on Indian goods, posing a significant challenge. The EU's sanctions, on the other hand, are considered difficult to enforce due to India's ability to pivot and substitute its exports with fuel refined from non-Russian sources, such as Iraqi oil [5].
The EU's sanctions are part of its efforts to cut off funding for Russia's war in Ukraine. Notably, if India were to scale back purchases of Russian oil to avoid US tariffs, it could reduce a key Russian revenue stream for Moscow's war effort, aligning with EU and Ukrainian interests [6].
The EU's designation of Indian refinery Nayara Energy, partly owned by Russian energy giant Rosneft, has sparked controversy. Nayara Energy has pushed back against the sanctions, calling them hypocritical [7]. However, experts agree that the EU's designation is unlikely to shift the war calculus for Russian President Vladimir Putin, but India's own math might change, depending more on Washington than Brussels [8].
The escalation by President Trump has reportedly increased India's desire to diversify away from the US and towards the EU [9]. The shake-up in the India-US dynamic is expected to end up benefiting the EU [10].
The EU has taken a more measured approach during trade negotiations, particularly in the agricultural sector which employs close to 44% of India's population [11]. The US tariffs on Indian goods could strengthen the mutual interest between the EU and India in finalizing a free trade agreement.
The overall momentum towards 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.
[1] India-EU FTA negotiations
[2] India-EU FTA negotiations update
[3] Impact of global trade volatility on India-EU FTA
[4] India-EU FTA negotiations progress
[5] Enforcing EU sanctions on India
[6] India's potential impact on Russian war effort
[7] Nayara Energy's response to EU sanctions
[8] Impact of EU sanctions on India
[9] India's desire to diversify away from US
[10] Shake-up in India-US dynamic benefiting EU
[11] EU's measured approach in agricultural sector
- The advancement of the India-EU Free Trade Agreement amid war-and-conflicts and US tariffs could signal a shift in Europe's trade politics, moving away from a dependence on America.
- The EU's policy-and-legislation, including sanctions on Russian entities, have created a general-news discussion about the influence of culture and economy within the context of global conflicts.
- As India and the EU work towards concluding their free trade agreement by 2025, the European economy may stand to benefit from the growing tensions between India and the US, particularly in sectors like agriculture.
