According to the Analysis and Translation Department of the Securities and Exchange Education and Information Company, and as reported by Euronews, the European Commission has developed a new strategic agenda for cooperation with India to strengthen trade and security relations with the world’s most populous democracy. However, India’s long-standing ties with Russia remain one of the main points of disagreement between the two sides.
With bilateral trade worth 120 billion euros, the European Union is India’s largest trading partner, and over 6,000 European companies operate in the country. To strengthen this relationship, the European Commission seeks to finalize a free trade agreement by the end of this year—an agreement that could significantly reduce tariff and administrative barriers between the two economies.
On one hand, Europe sees India as an opportunity to offset the damages caused by U.S. tariffs, but on the other hand, India’s special relations with Russia—especially its purchase of Russian oil—pose a serious challenge to this cooperation.
After trade relations between the EU and the U.S. were strained due to Trump’s average tariffs of 15%, the EU is now trying to accelerate agreements with other regions. Given current geopolitical complexities, the EU has now turned its attention to India—a country that today is the most populous nation in the world.
Jorge Liboreiro, Euronews correspondent on EU–India relations, says: “This situation could lay a new foundation for cooperation between the two sides and help them navigate together through turbulent geopolitical times.”
However, EU foreign policy chief Kaja Kallas has warned that India’s military and economic ties with Russia require careful examination. She noted that India’s large-scale purchases of weapons and oil from Moscow effectively help Russia sustain its war economy.
She added: “I think it is important for the European Union to engage, express its concerns, and at the same time strive to understand the perspectives and interests of the other side. Ultimately, of course, we must defend our own interests.”
The main question is whether India will change its economic formula and strategic approach under the influence of the EU’s recent proposals.
In light of recent geopolitical developments, one of the key areas of new engagement is the expansion of security and defense cooperation. In its 2025–2026 fiscal budget, India has allocated around 69 billion euros to defense. Although Russia still accounts for 36% of India’s arms supplies, the share of Western countries—such as the United States, the United Kingdom, France, and Germany—is on the rise.
As relations between New Delhi and Washington remain at their lowest point in recent years, with 50% tariffs imposed by the Trump administration creating a chill in relations, India is seeking a new partner in the West. According to Jorge Liboreiro: “India believes that the European Union has the capacity to become its main partner in the West.”
Overall, any new development in relations between New Delhi and Brussels could impact India’s capital markets. From the perspective of investors, any shift in India’s economic cooperation with the EU—particularly in the fields of energy, technology, and joint investment—could have a direct reflection on the country’s economic and financial indicators.