India-EU FTA emerges as flashpoint for Trump administration: Brahma Chellaney on US’ ‘coercive diplomacy’

The India-European Union free trade agreement that has been received with much fanfare in the country, has miffed Washington that sees the pact as Brussels undermining US President Donald Trump’s punitive campaign against New Delhi, said geostrategist Brahma Chellaney. 

Terming the entire saga as ‘US’ coercive diplomacy’, Chellaney said the India-EU FTA “has emerged as a flashpoint for the Trump administration”. Treasury Secretary Scott Bessent had even berated Brussels. He said they were unhappy that Brussels moved ahead with the agreement, and said that he found the Europeans very disappointing. He said EU was reluctant in joining the US to impose tariffs on India because they wanted the FTA signed.  

Chellaney said with Washington’s ‘spoiler’ mindset, the US sees FTA as undermining Trump administration’s "campaign against India, which has included the imposition of sky-high tariffs and the reimposition of sanctions on the India-operated Chabahar Port in Iran”. He said this was despite Chabahar’s role as a strategic counter to China’s Gwadar Port in Pakistan. 

Trump is also miffed that the deal allows the EU to diversify away from the US at a time when Washington is looking to capitalise maximum leverage over both the partners.

“There is a double irony here. By attempting to put India in the doghouse, the US may be accelerating the very multipolarity it seeks to arrest, pushing New Delhi into deeper strategic and economic alignment with the EU and other partners,” said Chellaney. 

He said by asking India to wind down its presence at Chabahar by April, the US is doing China a favour. “Once India exits Chabahar, Beijing would be the most likely candidate to fill the vacuum – potentially integrating the port into the Belt and Road Initiative, tightening China’s maritime grip on the Gulf of Oman and further encircling India,” he said.

INDIA-EU FTA

Negotiations for the India-EU FTA began in 2007 but were stalled for over a decade due to disagreements on market access, intellectual property rights, labour standards, and sustainable development. Talks collapsed in 2013 over issues such as tariffs on automobiles, wine, spirits, data security for Indian IT firms, and public procurement.

Despite several attempts between 2016 and 2020 to restart discussions, both sides resumed meaningful negotiations only in June 2022, focusing on trade, investment protection, and geographical indications agreements.

India has finalised seven deals since 2014, including with Mauritius, Australia, the United Arab Emirates, Oman, the United Kingdom, New Zealand, and now Europe. 

The current FTA is particularly relevant given the global disruption caused by high tariffs imposed by the United States, which set rates as steep as 50 per cent on Indian goods. These protectionist measures affected the international flow of goods, prompting India to seek alternative markets and reduce reliance on the US and China. The EU, facing similar tariff threats, also showed interest in diversifying its trade partnerships.