Quote from Alex bobby on September 18, 2025, 4:01 AM

How Military Business Could Be the Game Changer for the EU-India Free Trade Deal

As India and the European Union (EU) edge closer to concluding a landmark €150 billion free trade agreement (FTA), a new dimension is quietly reshaping the negotiations: defence and security cooperation. According to the new EU-India strategy set to be presented by the European Commission, military and security policies could become the backbone of this emerging partnership—transforming a traditional trade agreement into a comprehensive strategic alliance.

While issues like tariffs on automotive components, agricultural products, and wine and spirits still need ironing out, both sides appear increasingly ready to make concessions in the name of deeper defence ties. Sunil Prasad, Secretary General of the EU-India Chamber of Commerce, has said he is “certain that the FTA will be signed between Delhi and Brussels” before December, adding that “this is the cooperation that will pave the way for a stronger trade and economic relationship.”

Security Interests Drive Economic Ambitions

The growing convergence is not accidental. The war in Ukraine has exposed the vulnerabilities of Europe’s security landscape, while escalating tensions in the Indo-Pacific region have heightened India’s strategic concerns. The flare-ups with Pakistan only underscore New Delhi’s urgent need to modernise its armed forces.

The EU sees India as an indispensable partner in ensuring stability across the Indo-Pacific—a region vital to global trade routes and supply chains. India, on its part, aims to transform itself into a defence manufacturing hub. But as Prasad notes, “India wants to become a (weapons) manufacturing hub… but at the same time, India needs support from the European Union on this. India cannot do it alone.”

This creates a powerful incentive: tie defence industrial cooperation directly into the FTA, allowing European defence companies access to India’s massive market, while enabling Indian firms to gain cutting-edge EU technology and investment.

High-Level Security Diplomacy in Motion

Between 10–14 September, the EU’s Political and Security Committee (PSC)—composed of the 27 Member States’ ambassadors to the EU—visited New Delhi for the first time since its creation. They met with senior Indian political, military, and economic leaders to explore how security and defence cooperation can underpin broader economic ties.

Delphine Pronk, the PSC Chair, said: “Insights and recommendations gathered from our visit will be presented to the top political leaders of the EU, paving the way for enhanced cooperation with India.” The PSC plays a key role in coordinating the EU’s Common Foreign and Security Policy (CFSP) and the Common Security and Defence Policy (CSDP), meaning its endorsement signals serious intent.

Why Both Sides Need This Partnership

For Brussels, this agreement is as much about strategy as commerce. “It’s probably one of the worst kept secrets in Brussels that there is a very strong political alignment that we should have an agreement with India, whatever the cost,” says Hosuk Lee-Makiyama, director of the European Centre for International Political Economy (ECIPE).

The EU’s most important export market, the United States, is increasingly inward-looking and unpredictable. India, with its rapidly growing economy and a defence budget exceeding €70 billion for 2025–2026, offers a compelling alternative. Prime Minister Narendra Modi’s government is pushing to diversify the Indian military’s technology base and reduce reliance on Russian arms.

Recent deals underline this trajectory. India and Germany have agreed to build German-designed submarines in India. Between 2016 and 2022, India acquired 62 French Rafale fighter jets and is now planning to manufacture additional ones domestically in cooperation with Paris. Such moves align perfectly with EU ambitions to expand its defence industrial footprint abroad.

Strategic Autonomy and Realpolitik

Despite increasing engagement with the EU, India continues to walk a tightrope in its foreign policy. It maintains defence links with Russia, participates in Russian-led Zapad military exercises in Belarus, and has hosted warm interactions with both President Vladimir Putin and China’s Xi Jinping—even while courting the West.

“India is never laying all its eggs in one basket. It’s not joining exclusively to one alliance,” notes Lee-Makiyama. This strategic autonomy allows India to maintain leverage and flexibility, but it also makes a robust partnership with the EU appealing—as a counterweight to overdependence on any single bloc.

Meanwhile, tensions with Washington over trade tariffs and Russian oil purchases have made India wary of over-reliance on the U.S. market. This context gives additional impetus for India to deepen economic and security links with Europe.

The Pakistan Question

One lingering obstacle to full-fledged security cooperation remains Pakistan. India has asked the EU to suspend the Generalised Scheme of Preferences Plus (GSP+) benefits granted to Islamabad. This scheme allows Pakistan preferential access to EU markets in sectors like textiles in exchange for human rights and good governance commitments. New Delhi views this as an “unjustified privilege” that undermines its own trade position.

While Brussels may be reluctant to revoke GSP+ unilaterally, India’s insistence shows how security considerations are bleeding into trade talks—a sign of how closely intertwined these domains have become.

A Defence-Driven Future for the FTA

If military business becomes the cornerstone of the EU-India trade pact, it could transform the nature of EU external relations. This would not just be a free trade deal—it would be a strategic partnership anchored in joint defence production, technology transfer, and coordinated security policies.

Such an approach could also help the EU reduce its strategic dependence on the United States, while helping India modernise its military with European support. In a world of shifting alliances and great-power rivalries, tying security interests to economic cooperation may prove the masterstroke that seals the deal.

Looking Forward

As negotiations advance, the coming months will be critical in determining whether defence and security can truly anchor the EU-India free trade deal. If both sides manage to align their industrial, political, and strategic priorities, the agreement could be signed before the year’s end—ushering in a new chapter of cooperation.

Such a deal would not only strengthen economic ties but also elevate the EU-India partnership to a strategic level, positioning them as pivotal actors in shaping global security and trade architecture. The world will be watching closely as Brussels and New Delhi attempt to turn shared security concerns into a foundation for long-term prosperity.

Final Thoughts

The evolving EU-India relationship shows that modern trade agreements can no longer be separated from security realities. As global power dynamics shift, both Brussels and New Delhi are seeking reliable partners who can offer not just markets, but strategic depth. Defence cooperation provides exactly that—binding their economic futures to shared security interests.

If successful, this approach could redefine how major powers forge trade partnerships in the 21st century. For the EU, it means expanding its geopolitical reach beyond traditional allies; for India, it signals a decisive step toward becoming a global defence and economic powerhouse. The free trade deal, once seen as a purely economic pact, may well become the blueprint for a new era of strategic collaboration between Europe and Asia.

Conclusion

The ongoing negotiations for the EU-India free trade agreement highlight more than just an economic partnership—they reflect a strategic realignment driven by global security concerns. By intertwining defence cooperation with trade, both sides stand to gain: Europe can secure a stable partner in the Indo-Pacific while India accelerates its military modernisation with advanced EU technology.

Although challenges remain—such as agricultural tariffs, industrial competition, and the Pakistan question—the shared interest in security may provide the political will to overcome them. If military business becomes the foundation of this deal, the FTA could mark the start of a deeper geopolitical alliance, transforming EU-India ties from transactional to truly strategic.

In a shifting global order where security underpins prosperity, this defence-driven partnership could be the game changer that finally seals the historic EU-India free trade agreement.

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As the EU and India edge closer to a €150 billion free trade deal, defence and security cooperation could become the decisive factor reshaping their strategic partnership.