India is ramping up efforts to reach an FTA with the European Union by the end of 2025 in response to rising U.S. tariffs, seeking to mitigate their economic effects while strengthening India’s position within global trade. This move aims to alleviate import duties imposed by America while strengthening India’s position within it.
U.S. Tariff Escalation
On August 1st and 27th 2025 respectively, the United States introduced reciprocal tariffs of 25% against Indian imports before increasing it to 50% on August 27th as punishment for India purchasing Russian oil which, according to U.S. administration policy, supports Russia’s war efforts in Ukraine. These measures now threaten approximately $48.2 billion worth of Indian exports into America AP News/The Times of India/INDIA
India’s Strategic Response
India announced major tax reductions for hundreds of consumer goods such as air conditioners and small cars to address its economic decline, including air conditioners and small cars, in an attempt to spur domestic consumption and boost domestic growth. Furthermore, export markets for India are expanding into Europe, Latin America, Africa, and Southeast Asia with 60-65% chapters of trade agreements already finalised with EU.
Negotiations of EU Trade Deal
Maros Sefcovic will arrive in New Delhi for three days beginning this Thursday to mark significant progress in FTA negotiations between Europe and India. European representatives seek lower tariffs on vehicles, medical equipment, alcohol and dairy while India seeks better market access for textiles, pharmaceuticals, steel and petroleum (Reuters).
U.S. Pressure on EU Concurrently, former U.S. President Donald Trump urged EU nations to impose tariffs of up to 100% on imports from China and India as part of a strategy to force Russia out of Ukraine’s war. His administration expressed willingness to implement this plan but stressed the necessity of EU cooperation
The Guardian/FT.
India and the EU are currently engaged in trade talks that will have significant ramifications on India’s economic future. An EU-India Free Trade Agreement could offer India an effective tool to mitigate U.S. tariffs while strengthening their position globally.