The Aakhya Weekly #164 | An EU-India Partnership for an Uncertain Era
In Focus: The Art of Partnership in a Decade of Strategic Uncertainty
The New Strategic EU-India Agenda was released a few days ago, at a time of deep uncertainty in the global order. It read like a recognition of a simple but urgent fact: Europe and India now face a world whose rules and alignments are undergoing restructuring last seen in the mid-20th century. The document should be viewed more like a strategic reset than an incremental update. It explicitly alludes to widening cooperation from trade to technology, defence, supply-chain resilience and joint action on global governance. It is written in the language of mutual strategic interest: prosperity and sustainability, technology and innovation, security and defence, connectivity and global issues, and enabling measures to hold it together. It is a blueprint for a promising EU-India future, where Brussels seeks more than a trade deal, carefully constructing a framework for a long-term partnership.
What the agenda does is legitimate and sequence EU goals: speed up FTA deliverables, deepen technology cooperation, including on semiconductors, AI and clean technologies. The expectation is for this institutional structure to facilitate dialogues, working groups, and a possible EU-India Security & Defence Partnership that elevates politics to match economic ambitions. For India, it is an offer to marry market access and regulatory engagement to technology transfers and investment cushions; for the EU, it is an attempt to diversify partners and anchor supply chains outside a binary world.
Where are we with the FTA?
Talk of a comprehensive EU-India FTA is no longer just about diplomatic hedging. Negotiators have closed many chapters, and the two sides are reportedly targeting an “early harvest” or significant package by year-end, even as substantive chapters on automobiles, rules of origin, services and sustainable trade remain contentious. Rounds have accelerated in 2025, and the calendar suggests both sides want a deliverable soon. For instance, the 14th negotiating round is scheduled for October, and the urgency is not purely economic theatre, as it reflects real industrial and political pressures on both sides to show outcomes.
What is striking about the bargain on offer, however, is its asymmetry of constraints. For context, India’s usual tariff posture of imposing duties to protect domestic manufacturing collides with EU expectations for market access, notably, in sectors such as automobiles and some agricultural goods. This experience is not confined to EU negotiators alone, given the recent tariff battles between the rhetoric-heavy Trump 2.0 administration and India. Conversely, Europe’s demand for strong regulatory standards on sustainability, labour and digital governance intersects with India’s sensitivities over policy space and industrial policy. The negotiation thus becomes a test of whether a rules-based economic order can be made flexible enough to accommodate techno-industrial competition and divergent development paths.
Why Europe Needs India Now
While the FTA goals are urgent, the strategic agenda is existential. The impetus is not simply the prospect of expanded trade; it is the convergence of several systemic shocks that make the India relationship more valuable to Europe than at any point since both the post-war period and the fall of the Soviet Union.
First, the trans-Atlantic certainty that once anchored European strategy has frayed. European leaders are explicitly recalibrating their economic dependencies amid a tougher U.S. trade posture and mounting talk of tariffs and techno-economic decoupling. Ursula von der Leyen and other Commission officials have publicly acknowledged that Europe must diversify partners to reduce over-reliance on any single market or supplier. That calculus elevates an Indian landscape that is home to a large market, a democratic partner, and an industrialising economy, from secondary partner to a centrepiece of diversification strategy.
Second, the Russia-Ukraine war has not only hardened security choices but also exposed Europe to energy and geopolitical vulnerabilities. India’s continued pragmatic ties with Moscow, including discounted energy purchases and selective defence engagements, are a diplomatic headache for Brussels. Yet, the EU’s response has been to compartmentalise and keep security concerns on the table while pushing collaboration where mutual gains exist. This is a delicate dance, as Kaja Kallas and other European voices have candidly expressed; however, it also underscores Europe’s long-term interest in strategic hedging by expanding relationships across the Indo-Pacific.
Third, Europe is currently navigating an economic terrain marked by sluggish growth, inflation, and political fragmentation across member states. The views of European strategic thinkers on these issues underscore that European businesses often struggle to scale globally due to the single market’s fragmentation and because investment in critical tech remains insufficient compared to that in the U.S. and China. Capital-intensive sectors such as semiconductors, quantum computing, green transition technologies, and data infrastructure are underfunded or impeded by over-regulation and, in some cases, regulatory divergence. In this environment, diplomacy becomes an economic tool. EU firms are no longer just seeking market access; they are seeking diversified suppliers, reliable partners for manufacturing, and collaborators for green and digital transitions.
With its large demand, manufacturing potential, cost-competitive scale and a growing tech-related human capital base, India offers what Europe increasingly needs. In return, Europe can provide industrial know-how, standards and capital, especially in areas where regulatory predictability and mutual trust are consequential. The new EU-India Agenda explicitly links the FTA efforts to cooperation in semiconductors, AI governance and green innovation, not just because these are growing markets but because they will define comparative advantage in the decade ahead. Understandably, Europe could lag and lose its edge if there are missteps in any of these sectors.
How to Manage Risks and Divergences?
Three fault lines deserve particular attention. Firstly, geopolitical divergence. India’s measured balancing between major powers, especially a continued transactional relationship with Russia, will continue to irritate some EU capitals and invite pressure from allies. While recent rhetoric from Europe includes pronouncements on the need for strategic autonomy, confronting India’s autonomous actions will prove to be a challenge. The inertia for strategic thinkers is real, and it will take time getting used to an ambitious India in flux. The right response is not moralising but compartmentalisation. Europe could focus on building institutional mechanisms for transparency, ie, through regular defence dialogues and third-party verification where feasible, facilitating cooperation without pretending away disagreements. It would be prudent for Europe to clearly articulate the boundaries it is unwilling to cross, such as involvement in sanctions circumvention, while simultaneously ensuring that channels of engagement remain open in areas of mutual interest, including maritime security, counter-terrorism, and broader crisis-management cooperation.
A second challenge lies in industrial and regulatory frictions. Europe’s insistence on maintaining high standards in areas such as sustainability, data protection, and labour practices is often perceived in India as a form of disguised protectionism. Navigating this tension will require a pragmatic approach built on calibrated reciprocity. One option could be to gradually phase in regulatory alignment, while simultaneously offering targeted capacity-building initiatives that help Indian firms meet EU requirements without being unduly burdened. Incorporating realistic transition periods for sensitive industries would provide breathing room for adjustment.
Third, strategic autonomy versus alliance politics. EU efforts to diversify away from a single superpower’s sphere should not become instruments to punish partners that diverge on other foreign policy matters. There is a fine line between strategic autonomy and transactional opportunism; Europe’s credibility will be tested if it is perceived as weaponising trade policy for geopolitical signalling rather than building durable partnerships.
A Pragmatic Partnership for a Fragile Order
To manage tensions, the two sides should prioritise institutional architecture over episodic deals. A robust EU-India Technology & Trade Council with working groups on risk management, a security-focused dialogue that includes maritime and cybersecurity contingencies, and a joint investment instrument to finance green and semiconductor projects, anchored by a phased FTA roadmap, would be helpful. The EU must also front-load technical cooperation. For instance, it could help Indian firms comply with EU standards, while India shows reciprocity in market access timelines.
For the EU, engaging India is both a diversification imperative and a strategic investment in resilience. For India, a closer European partnership means access to capital, standards and markets that can accelerate industrial modernisation. That said, success depends on realism, as neither side will get everything. However, if Brussels and New Delhi treat the agenda as a platform for pragmatic, sector-by-sector partnership, they will create something more durable than a single FTA. A resilient, multi-layered strategic relationship which does not paper over differences but builds a fitting agreement for an uncertain century.
Top Stories of the Week
Strengthening the Startup ecosystem: DPIIT and CarDekho Partner for Startup Growth.
India’s startup ecosystem received a boost with the signing of an MoU between Startup India, an initiative of DPIIT under the Ministry of Commerce and Industry, and CarDekho Group. The partnership aims to accelerate entrepreneurship in sectors such as mobility, fintech and other emerging technologies. Through this collaboration, DPIIT-recognised startups will gain access to the CarDekho Group’s ecosystem, along with mentorship, market linkages, technology infrastructure, and potential funding.
A key feature will be joint innovation challenges under the Bharat Startup Grand Challenge, focusing on electric vehicles, auto-tech, sustainable solutions and financial innovation. Co-investment opportunities will also be channelled through CarDekho’s Girnar Vision Fund, complemented by capacity-building programmes for founders. DPIIT Joint Secretary Shri Sanjiv said the initiative will combine corporate expertise with startup agility to deliver scalable solutions. Mr Amit Jain highlighted the group’s commitment to mentoring and co-creating with entrepreneurs for India and global markets.
India’s Homegrown D2M Chip Steals Spotlight at IBC 2025
At IBC Amsterdam 2025, India’s indigenously developed Direct-to-Mobile (D2M) semiconductor stood out amid global anticipation for 5G Broadcast technology. While giants like Qualcomm have postponed rollout of 5G Broadcast chipsets until 2028, D2M has already been demonstrated as market-ready on a broad range of devices. During the event, India’s D2M chips garnered interest from international players, including Brazil, which is evaluating D2M for its next-generation broadcast standard. Experts note that D2M’s compatibility with feature phones, smartphones, tablets, laptops, dongles, and home gateways could immediately empower over 200 million feature-phone users in India.
Meanwhile, Qualcomm clarified that its 5G Broadcast feature will only appear in premium new devices from early 2028, leaving mid- and low-tier segments waiting much longer. The Parliamentary Standing Committee has urged that India fast-track policy clearance for D2M, emphasising its potential to boost the indigenous semiconductor ecosystem and ensure more inclusive access. With D2M already proving its viability, India looks set to lead in broadcast-to-device innovation—well ahead of delayed 5G Broadcast alternatives.
A Few Good Reads
Shekhar Gupta dissects the not-so-fine line between a hard state and a soft state.
Syed Ata Hasnain states that a future-ready disaster management in the Himalaya requires a massive technology scale-up
Rahul Matthan says, “Anyone who believes that they still have ‘free will’ online is simply deluded,” highlighting that algorithms shape behaviour and need democratic oversight.
Pranab Dhal Samanta contends that MAGA may make for great politics, but so far, it has been bad geopolitics.
MP Tangirala writes, “If orderly deregulation is to be realised, regulatory agencies will need to foster and sustain a level of techno-economic expertise and sophistication.”