As traditional trade disagreements give way to strategic alignment, the likelihood of the EU-India Free Trade Agreement (FTA) being finalized by the end of 2025 is becoming more and more dependent on collaboration in defense and security policy.
Both New Delhi and Brussels are willing to make compromises if it results in greater defense industry cooperation, even though there are still unresolved issues with vehicles, wine and spirits, and agricultural products.
The EU is a desirable partner because of India’s rapidly expanding defense budget, which is expected to surpass €70 billion for 2025–2026, and its concurrent efforts to modernize the air force and navy through a variety of procurement channels, particularly in light of India’s aspirations to become a center for the production of weapons.
Recent agreements like the long-term Rafale aircraft cooperation with France and the submarine construction arrangement with Germany demonstrate India’s preference for European defense technology as a means of achieving self-reliance.
The consequences of the war in Ukraine, the growing need for defense in the Indo-Pacific, and the decline in trade with the United States have made New Delhi strategically essential to Brussels.
The first-ever visit to India by the EU’s Political and Security Committee, which included ambassadors from all 27 member states, shows a conscious shift in the EU’s Common Security and Defence Policy towards portraying India as a defense partner.
Additionally, EU institutions view India’s defense-industrial sector as a new market for co-production and technology transfer, which is consistent with European goals to lessen reliance on frameworks centered around NATO.
However, because of India’s geopolitical balancing approach, tensions still exist. Despite growing European involvement, New Delhi maintains its oil trade with Moscow and participates in defense drills with Russian forces, notably the Zapad military exercises near NATO’s borders. This has led to threats of tariffs from the United States under Trump’s administration.
A politically delicate demand that might make it more difficult for Brussels to reach an internal consensus is India’s insistence on redefining the EU’s preferential trade treatment for Pakistan under the GSP Plus system.
Indian policymakers are also conscious of the misaligned geopolitical priorities: New Delhi continues to hedge its bets by keeping friendly relations with Beijing and hosting President Putin for defense agreements on systems like S-400 or even S-500 missiles, while the EU sees India as a counterweight to China in the Indo-Pacific.
In the end, the new EU-India strategy is beginning to rely heavily on defense cooperation. Security cooperation moves the FTA into the realm of strategic need in addition to providing incentives to get over traditional economic barriers.
Given India’s pressing need to diversify defense suppliers and boost domestic manufacturing capacity, as well as Europe’s decreased reliance on U.S. trade markets, the military factor could prove to be crucial in securing the €150 billion free trade agreement.
The alignment of interests guarantees that both parties view defense industry alignment as a means of obtaining long-term political and economic gains while projecting stability throughout Eurasia and the Indo-Pacific.
