India and EU set for 'mother of all deals' as Trump's tariff uncertainty looms

India and EU set for 'mother of all deals' as Trump's tariff uncertainty looms

European Council President Antonio Luis Santos da Costa and European Commission President Ursula von der Leyen will be chief guests at India's Republic Day celebrations next Monday. Besides state banquets and the ceremonial pomp of the event, the two leaders will have a more pressing item on their agenda - advancing free trade talks with Asia's third largest economy. This comes at a particularly trying geopolitical moment for Europe, with President Donald Trump first threatening to escalate his trade war with European allies for opposing a US takeover of Greenland and then backing off.

The choice of guests also carries an important diplomatic message from India - Delhi is accelerating strategic and trade ties with the rest of the world as the impasse over Washington's 50% tariffs on India spills over into the new year.

"[It] sends a signal that India maintains a diversified foreign policy… and that it is not beholden to the whims of the Trump administration," Chietigj Bajpaee of the London-based Chatham House think-tank told the BBC.

Some reports say the deal could be announced as early as 27 January when leaders from both sides meet for a high-level summit. Both von der Leyen and India's Trade Minister Piyush Goyal have called it the "mother of all deals" - highlighting the importance they've placed on concluding negotiations that are nearing the finish line after nearly two decades of hard bargaining on both sides.

The pact will be India's ninth free trade agreement (FTA) in four years, coming off the back of a string of deals with the UK, Oman, New Zealand and other countries. For Brussels, it follows the recently concluded trade deal with the Mercosur trading bloc as well as with Japan, South Korea and Vietnam.

"Both sides now seek reliable trade partners, as threats arising out of the geopolitics have created a tumultuous environment for commerce. The urge is equally strong - for India to offset US tariff issues, and the EU to offset trade dependence on China which it considers unreliable," says Sumedha Dasgupta, senior analyst at the Economist Intelligence Unit.

The deal will also mark a "continuing and significant effort to shed India's notoriously protectionist carapace", adds Dasgupta.