New Delhi: With trade ties between Washington and its partners under strain and global commerce facing renewed uncertainty, India and the European Union on Tuesday (January 27) concluded negotiations on a major free trade agreement, one of the most ambitious either side has pursued – though sensitive sectors remain excluded – and signed their first-ever Security and Defence Partnership, casting the relationship as a reliable anchor in a “complex” global environment.At the 16th India-EU Summit, Prime Minister Narendra Modi, European Council President Antonio Costa and European Commission President Ursula von der Leyen repeatedly emphasised stability, predictability and commitment to a rules-based international order, language that came amid disruption in transatlantic trade and the return of tariff-driven economic diplomacy under US President Donald Trump.The two EU leaders were also chief guests at India’s Republic Day parade the day before, the first time EU representatives have participated in the ceremony.A summit framed around stability in a disrupted global order“The global order is undergoing significant upheaval,” Modi said in his press statement after the talks, adding that “the partnership between India and the European Union will strengthen stability in the international system”. Costa, a former Portuguese prime minister, said the summit sent “a clear message to the world” that “at a time when the global order is being fundamentally reshaped, the European Union and India stand together as strategic and reliable partners”.His colleague, von der Leyen, a former German defence minister, framed the trade agreement in explicitly geopolitical terms. “By combining our strengths, we reduce strategic dependencies at a time when trade is increasingly weaponised,” she said, adding that the deal demonstrated that “cooperation is the best answer to global challenges”.None of the leaders mentioned the United States or Trump by name. But the timing was unmistakable.India currently operates under a 50% tariff regime imposed by Washington after Trump levied an additional 25% duty last year on Indian goods over purchases of Russian oil. The EU, meanwhile, has only recently stepped back from a fresh escalation after Trump threatened additional tariffs and political retaliation linked to Greenland, prompting the European parliament to freeze the ratification of a provisional EU-US trade understanding earlier this month.The summit produced 13 agreed outcomes spanning trade, security, mobility, science and technology, disaster management and clean energy cooperation.The centrepiece of the summit was the conclusion of negotiations on the India-EU free trade agreement, described by both sides as the largest and most ambitious trade pact they have concluded.None of the leaders mentioned the United States or Trump, but the timing was unmistakable. Photo: AP/PTI.The 27-member bloc is India’s second-largest trading partner, with bilateral trade in goods touching nearly $136 billion in 2024-25, including about $76 billion in Indian exports and $60 billion in imports, according to Indian officials. Services trade between the two sides is estimated at around $83 billion.Modi said India had “concluded the largest free trade agreement in its history”, arguing that it would open new opportunities for farmers and small industries, boost manufacturing and services, and strengthen global supply chains. Von der Leyen described it as “the mother of all deals”, creating a market of two billion people and sending a signal that “rules-based cooperation still delivers”.The trade deal eliminates or reduces tariffs on 96.6% of EU goods exports to India, saving around €4 billion annually in duties. “India will grant the EU tariff reductions that none of its other trading partners have received,” according to the European Commission.Tariffs on European cars will drop from 110% to as low as 10% over time, though only for a quota of 250,000 vehicles annually covering combustion engine vehicles with import prices above €15,000. Battery electric vehicles will be excluded from import duty reductions for the first five years to protect investments by domestic players, after which EVs will follow similar duty cuts.Addressing reporters at a special briefing after the summit, commerce minister Piyush Goyal said India also stood to gain from lower EU tariffs, particularly in labour-intensive sectors. He said Indian exports of textiles and garments, footwear, leather goods, marine products, toys and sports goods could see significant expansion once the agreement enters into force.The agreement covers almost 99% of India’s exports to the EU, Goyal said, calling the resultant market opening “unprecedented” for Indian producers.Sensitive sectors left outside the FTAThe negotiations, which began 20 years ago, succeeded because the two sides decided to leave the difficult issues out of the agenda. “Both sides [agreed] to focus on what is good for both set of countries, the European Union and India, leaving the sensitive issues aside,” he said, calling the outcome “a very balanced, equitable and fair free trade agreement”.On the EU side, trade commissioner Maros Sefcovic described the breakthrough as a shift in negotiating approach. “If this is sensitive for you, let’s not touch it,” he told Euronews, arguing the deal showed that “win-win trade is real”.Commodity-specific exclusions were detailed by the European Commission, which said sensitive agricultural products such as beef, poultry, rice and sugar were excluded from liberalisation on the EU side, with all Indian imports continuing to be subject to EU health and food safety standards.On steel, one of the more contentious issues given the EU’s Carbon Border Adjustment Mechanism (CBAM), the commerce minister said “the European Union has come in with a new set of proposals on steel and we have agreed in good faith to work together towards a very preferential treatment as a free trade agreement partner so that India gets a better deal than most other countries with whom the EU does not have an FTA”.At the special media briefing, commerce secretary Rajesh Agarwal elaborated that under the free trade agreement, a technical dialogue has been agreed to address how Indian industries can access the EU market despite CBAM regulations. He claimed that the agreement encodes that any flexibility the EU extends to other countries will automatically flow to India.EU trade commissioner Sefcovic said the deal could be operational by 2027 after ratification by the European parliament and India.The “current trade turmoil on the global scene is really requiring us to move much faster to really speed up the processes. And I will do my best to talk with both Member States in the Council and European parliament that this deal really merits special attention and we need to do it as fast as possible”, he said.The summit also agreed on a framework on mobility, focussed on short-term movement rather than migration. Misri clarified that the arrangement would apply to stays of “up to one year”, covering time-bound categories, and stressed that “visas and immigration remain under the national competence of individual member states”.The negotiations, which began 20 years ago, succeeded because the two sides decided to leave the difficult issues out of the agenda. Photo: MEAphotogallery/Flickr/CC BY NC ND 2.0.A first-ever India-EU defence partnershipAlongside the trade deal, India and the EU signed their first Security and Defence Partnership covering maritime security, cyber threats, counterterrorism and space. “Today, the world’s two largest economies and democracies launch their first-ever security and defence partnership,” von der Leyen said. “This is a landmark departure and a trust-based platform for cooperation on the strategic issues that matter most.”“We will deepen our cooperation on maritime security, for example, joint naval exercises to tackle piracy. And we will step up our work on countering cyber and hybrid threats, which are getting more sophisticated by the day,” she said. The two sides also launched negotiations on a Security of Information Agreement to allow sharing of classified material.Elaborating on what the new Security and Defence Partnership would mean in practical terms, foreign secretary Vikram Misri said it opened the door to deeper cooperation between the Indian and European defence industries, including the possibility of Indian firms participating in European defence initiatives.Ukraine, Gaza and counter-terrorismAsked whether the defence partnership meant India would scale back cooperation with Russia, he replied that “India’s relationship with Russia is something on which we have spoken publicly on several occasions”.“There is a historical context for that,” Misri said, adding: “But these are two things that stand on their own and that go forward on their own.”Ukraine featured most prominently in Costa’s remarks, making him the only leader to address the war substantively at the summit. “This is a key moment. We are supporting all efforts to reach a just and sustainable peace. Ukraine has shown its readiness, including at the cost of difficult compromises,” he said, adding that India could help to create conditions for a peaceful solution.The joint statement said both sides “expressed concern over the ongoing war, which continues to cause immense human suffering and carries global consequences” and will “continue to support efforts towards the achievement of a comprehensive, just and lasting peace in Ukraine through dialogue and diplomacy, based on the principles of the UN Charter and of international law, including independence, sovereignty and territorial integrity.”The carefully calibrated language papers over deep differences. India became the world’s largest importer of seaborne Russian oil after the 2022 invasion, sourcing at its peak 35% to 40% of its crude from Russia – though China remained the largest importer of Russian oil overall by value.Indian refineries exported 100 million barrels of Russian-origin refined products to EU markets in 2025, with Reliance’s Jamnagar refinery accounting for nearly 60% of these exports. The EU banned such imports effective January 21 under its sanctions package.On Gaza, the joint statement noted UN Security Council Resolution 2803 of November 17, 2025, which welcomes establishment of a Board of Peace and authorises an International Stabilisation Force. The leaders “encouraged all parties to implement the resolution in its entirety, in line with international law and relevant UN Security Council resolutions” and called for “a just and lasting solution, based on the implementation of the two-State solution, through dialogue and diplomacy”.There was no mention of separate Trump administration peace efforts, signalling that both India and the EU are sticking to the UN-backed approach and do not want to see the expansion of the Board of Peace beyond its ambit on Gaza. The United States had invited both the EU and India, but neither has explicitly given an answer to the initiative that Trump has claimed could be extended to other conflict zones.The joint statement also underscored counter-terrorism as a core area of cooperation, with both sides strongly condemning terrorism “in all its forms and manifestations”, including cross-border terrorism. It specifically referred to recent attacks, including those in Pahalgam and at the Red Fort, and called for the perpetrators, organisers, financiers and sponsors of terrorist acts to be held accountable and brought to justice, stressing that there could be “no justification whatsoever” for terrorism.