Why the EU is reaching out to India in search of new friends

Good morning. US President Donald Trump last night threatened to slap 25 per cent tariffs on imports from the EU, claiming the bloc “was formed to screw the United States.”

Today, our trade and competition correspondents explain why the European Commission is decamping to India for a goodwill tour, and I report on what happened when the commission pitched its brand new green industrial strategy to a room full of sceptical CEOs.

Reaching out

European Commission president Ursula von der Leyen is taking her team of commissioners to India today in an attempt to rekindle relations with the world’s fifth-largest economy, write Barbara Moens and Andy Bounds.

Context: Brussels is looking for new trade partnerships across the world given the uncertainty over US President Donald Trump’s trade policy, and to decrease Europe’s economic dependency from China.

The commission wants to rekindle slow-moving negotiations on a free trade deal with New Delhi, as well as looking into more security and defence co-operation in the Indo-Pacific.

“The timing of this visit is of course particularly interesting given the global developments that we’re facing,” said one EU official, adding that they would look towards India “as one of those great powers with which we look to join forces also on questions of security, on questions of defence.”

On the trade talks, the official said it was “difficult to say when we will cross the finish line” as New Delhi is notoriously tough in its trade negotiations. India has high tariffs on food, alcohol and other sensitive products, and is reluctant to drop them to EU levels.

“We are both seeking a mutually beneficial and balanced free trade agreement. The level of engagement has intensified,” Saurabh Kumar, the Indian ambassador to the EU, told the Financial Times.

Tomorrow, the two parties will hold a joint Trade and Technology Council as part of the EU visit. Both sides seek to bolster collaboration in technology such as semiconductors, artificial intelligence and quantum computing, according to a draft statement seen by the FT.

The visit will also pave the way for more concrete results at an EU-India summit later this year. That summit “aims to raise the relationship to a higher strategic level,” Kumar said. “It is good that there is greater interest in the EU towards India.”

Chart du jour: Running low

The EU plans to relax its gas storage refilling targets for member states to reduce market disruption, as speculation mounts that the bloc may not be able to reach its mandated target this year.

Industrial-strength concern

The ink was barely dry on the European Commission’s new plan for the continent’s green industrial future, when a phalanx of disgruntled industrialists lined up to tell president Ursula von der Leyen what more she needed to do.

Context: Brussels yesterday released its Clean Industrial Deal, a plan to maintain ambitious green transition plans while boosting the continent’s economy, with complementary measures aimed at watering down some regulations for small businesses.

At an event in Antwerp yesterday, von der Leyen met dozens of industry CEOs to both pitch the new approach and hear their gripes.

Some warned her that the continent was only achieving “decarbonisation through deindustrialisation” as factories close due to high energy prices and red tape.

Peter Huntsman, the CEO of petrochemicals producer Huntsman Corporation, said that Europe’s shrinking industrial base was undermining other aspects of the commission’s agenda, such as bolstering defence.

“The world needs a strong and prosperous Europe, this can only happen with a competitive manufacturing industrial base that will facilitate building modern defence capabilities, and provide employment and economic opportunity,” Huntsman told the FT. “This will also bolster Europe’s independent diplomatic influence around the world.”

Bart De Wever, Belgium’s prime minister and co-host of the event, also weighed in.

“We don’t want to become a museum,” he told von der Leyen and the CEOs. “The best regulation won’t come into force if there is no one left to comply.”

Von der Leyen assured the industrialists that she had heard their complaints, that the regulatory changes were influenced by their previous recommendations, and that the new advice would be taken on board.

“We know that too many obstacles still stand in your way,” she said. “We must turn the tide. And this is the central goal of the Clean Industrial Deal. We want to cut the ties that still hold you back. So that Europe can be not only a continent of industrial innovation, but also a continent of industrial production.”

“We need to transform Europe’s ambition ‘to be’, into a determination ‘to do’. Every day, Europe is falling behind its goals,” said Ilham Kadri, president of chemicals lobby group Cefic, which co-organised the Antwerp event. “In the turbulent times we are in, we need bold action from the European leadership.”

What to watch today

1. European Commissioners begin trip to India.

2. European parliament president Roberta Metsola and EU chief diplomat Kaja Kallas visit Washington.

3. G7 finance ministers meet on the margins of the G20 gathering in Cape Town, South Africa.

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