Vrinda Sahai and Nicolas Köhler-Suzuki
Nicolas Köhler-Suzuki: For most of the time, the honest answer to when this deal will happen was probably undetermined. The negotiations started in 2007 and for the best part of the decade, they were in what I would call a “zombie state.” What changed is that the world changed around both India and the EU, faster than anticipated. We must understand the three forces that converged almost simultaneously. The first and most obvious one is Trump. The United States slapped tariffs of up to 50 percent on Indian exports in mid-2025 - 25 percent reciprocal, 25 percent for Russian oil purchases.
The EU also got hit with 15 percent baseline tariffs even after a deal. Suddenly, both sides found themselves at the receiving end of American aggression and the political incentive was to show the world that you have other friends. The second force is China. For the EU, the exposure to China is structural—earths, technologies, battery components, pharmaceuticals. India can offer something that no other partner of a comparable scale can: a very large English-speaking economy with a young workforce and strong ambitions for manufacturing. For India, the calculation is similar but in reverse.