Germany’s Merz floats possibility of EU-India trade deal by end of January

AHMEDABAD ,India, Jan 12 (Reuters) – German Chancellor Friedrich Merz floated on Monday the possibility that the European Union and India could sign a landmark free trade agreement by the end of January, a move that could reshape global trade ties as protectionism increases and U.S.-India talks remain stalled.
Top EU leaders would travel to India to mark the deal if negotiations wrap up in time, Merz told reporters in the western Indian city of Ahmedabad on Monday after meeting Indian Prime Minister Narendra Modi.

“In any case, they will take another major step forward to ensure that this free trade agreement comes into existence,”Merz said during his first trip to India since becoming a chancellor.

European Union officials have yet to comment.

A trade deal, under debate for years, is seen as a chance for both sides to strengthen economic ties and cut dependence on China and Russia. Bilateral trade between India and the EU will total 120 billion euros ($140.21 billion) in 2024, making the block India’s biggest trading partner.

URGENCY GROWS

Talks have gathered pace since the United States, under President Donald Trump, raised tariffs on Indian goods and pressured New Delhi to stop purchasing Russian oil.

A separate India-U.S. Trade deal collapsed last year after a breakdown in communications between the two governments.
The EU-India pact would continue on the heels of the European Union’s recent agreement with South America’s Mercosur group and support Europe’s push to build new trade networks as global rules shift.
Indian Trade Minister Piyush Goyal, speaking at a separate event in the western state of Gujarat, said an agreement was almost at its final stages.

German officials told Reuters the latest talks between Merz and Modi were “very intensive,” raising hopes for a breakthrough.
The EU is pushing for steep tariff cuts on cars, medical devices, wine, spirits and meat, along with stronger intellectual property rules, while India is seeking duty-free access for labor-intensive goods and faster recognition of its growing automobiles and electronics sectors.

An Indian official familiar with the talks told Reuters last month that disputes over steel, coal levies and market access would need further compromise.

The two countries signed agreements on minerals, healthcare and artificial intelligence during Merz‘s visit.

‘RENAISSANCE OF UNFORTUNATE PROTECTIONISM’

Germany, which relies on India as a growing market, is also urging New Delhi to reduce its dependence on Russian energy and weapons. India still works closely with Russia, where much of its military equipment originates, on security policy, and it is one of the largest purchasers of Russian gas and oil alongside China.
“We are in complete agreement in our evaluation of Russia’s war of aggression against Ukraine,” Merz said. At the same time, he understood how dependent India still is on Russian oil and gas. “Obviously, it is not that simple in India, and I am the last person to visit other countries wagging my finger at them.”

Merz chose India for his first Asian trip as opportunityr, highlighting a shift in strategy among European leaders, who previously focused on China.
The German chancellor said the world is experiencing “a renaissance of unfortunate protectionism” that harms Germany and India. He did not name any countries.
While the United States has imposed tariffs on trading partners, China introduced export controls on minerals used in areas such as automobiles, causing months of supply chain disruption last year due to the U.S.-China trade war and affecting German carmakers.

Beijing also slapped restrictions on some semiconductors widely used in the car industry following the Dutch government’s decision to seize control of Chinese-owned chipmaker Nexperia.
($1 = 0.8559 euros)
Reporting by Andreas Rinke in Ahmedabad and Shivangi Acharya and Sakshi Dayal in New Delhi Writing by Miranda Murray and Kirsti Knolle Editorial by Susan Fenton

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PM Narendra Modi recently used informal car rides as a friendly gesture with visiting world leaders. After Russian president Vladimir Putin and British Prime Minister Keir Starmer,Germany‘s new chancellor Friedrich Merz, on January 12, shared a ride with Modi during his two-day maiden official visit to India.

Beyond formal conversations, the two leaders flew kites, visited the Sabarmati Ashram in Ahmedabad and highlighted the growing strategic partnership between India and Germany.

While addressing the media in Gandhinagar in the afternoon, Merz said India is a “desired partner” and a “partner of choice” for Germany. He expressed a strong commitment towards elevating India-Germany relations to a higher strategic level. He has also highlighted the need to conclude negotiations on the India-European Union FTA (Free Trade Agreement) to unlock the full potential of economic ties between the two countries.

Merz said deeper economic integration through an India-EU FTA would significantly strengthen bilateral trade and investment, adding: “We want to deepen cooperation among our defense industries. This has strategic significance, and we have signed an MoU on closer cooperation in development, production, innovation and strengthening global supply chains.”

New Delhi:

India‘s policy of choosing from where to source defense hardware is driven by national interest, and is not at all ideology, Foreign Secretary Vikram Misri said in response to a question by NDTV linked to the official visit of German Chancellor Friedrich Merz.

The German leader, who met with Prime Minister Narendra Modi today, said Germany wants to cooperate more closely on security issues to reduce India’s dependence on Russia. India is already in discussions for a potential deal to build six submarines by Germany’s Thyssenkrupp Marine Systems in a partnership with Mazagon Dock Shipbuilders.

“On the security policy remarks that the German chancellor made and other remarks on decrease in our [defence] sourcing from other sources, I think as far as the security policy aspect is concerned, he was pointing to what I was talking about earlier, which was a change in the approach that Germany has taken with regard to defense and security policy in so far as India is concerned,” Misri said.

But look, our approach on defense sourcing is driven completely by national interest. There are a lot of factors involved in that, and it is certainly not ideological, it is entirely driven by our interest. So I would not say that sourcing from one is linked to sourcing from another,” he added.

India still works closely with Russia, where much of its military equipment originates, on security policy, and it is one of the largest purchasers of Russian gas and oil alongside China.

“We have a process in place that sets the requirements that we have at any given time. We look at where in the world if we are going to source it from abroad, if we are not going to manufacture locally, can we source it in the most convenient manner. I don’t think one is influenced by the other,” he said.

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