The possibility of the EU-India Free Trade Agreement (FTA) being concluded by the end of 2025 is increasingly tied to defence and security policy cooperation, signalling a shift from traditional trade disputes to strategic alignment.

While outstanding issues remain in agricultural products, automobiles, and wine and spirits, both New Delhi and Brussels are prepared to make concessions if it leads to deeper defence industrial collaboration.

India’s rapidly growing defence budget—exceeding €70 billion for 2025–26—and its parallel drive to modernise the navy and air force through diversified procurement channels make the EU an attractive partner, especially given India’s ambition to become a weapons manufacturing hub.

Recent deals, such as the submarine construction agreement with Germany and the sustained Rafale fighter partnership with France, highlight India’s preference for European defence technology as a pathway to self-reliance.

For Brussels, the Ukraine war’s fallout, rising defence demand in the Indo-Pacific, and deteriorating trade reliance on the United States have made New Delhi strategically indispensable.

The EU’s Political and Security Committee’s first-ever visit to India, involving ambassadors of all 27 member states, reflects a deliberate pivot toward framing India as a defence partner within the EU’s Common Security and Defence Policy.

Furthermore, EU institutions see India’s defence-industrial ecosystem as a new market for technology transfer and co-production, aligning with European ambitions to reduce dependence on NATO-centric frameworks.

However, tensions remain due to India’s balancing strategy in global geopolitics. Despite increasing European engagement, New Delhi continues defence exercises alongside Russian forces—including participation in the Zapad military drills close to NATO’s borders—and maintains oil trade with Moscow, which has triggered U.S. tariff threats under Trump’s administration.

India also insists on redefining the EU’s preferential trade treatment for Pakistan under the GSP Plus scheme, a politically sensitive demand that could complicate Brussels’ internal consensus building.

Moreover, Indian policymakers are aware of mismatched geopolitical priorities: while the EU views India as a counterweight to China in the Indo-Pacific, New Delhi continues to hedge its bets by maintaining cordial ties with Beijing and hosting President Putin for defence agreements on systems such as S-400 or even S-500 missiles.

Ultimately, defence cooperation is emerging as the backbone of the new EU-India strategy. Security collaboration not only offers incentives to overcome conventional trade barriers but also pushes the FTA into the domain of strategic necessity.

Given Europe’s diminished reliance on U.S. trade markets and India’s urgent need to diversify defence suppliers while increasing domestic production capacity, the military dimension indeed has the potential to be the game-changer in sealing the €150‑billion FTA.

The convergence of interests ensures both sides see defence industrial alignment as a way to project stability across the Indo-Pacific and Eurasia while securing long-term economic and political returns.

EU News Report