August 9, 2025

The year opened with big hopes for the European Union and India. In February, European Commission President Ursula von der Leyen visited New Delhi and, alongside Indian Prime Minister Narendra Modi, told officials to solve their long-standing trade differences and speed up a free trade agreement. But the exciting momentum took a hit in July when India was caught up in the EU’s 18th sanctions package against Russia. The EU decided to stop imports of refined oil products made from Russian crude, even if processed by other countries like India. This means Nayara Energy, an Indian refinery partly owned by Russia's Rosneft, got slapped with sanctions. EU foreign policy chief Kaja Kallas announced on X, "For the first time, we're designating a flag registry and the biggest Rosneft refinery in India." However, Nayara Energy fired back, calling it "hypocritical" because "many European countries continue to import Russian energy through various sources, they take a high moral ground by chastising and sanctioning an Indian asset for processing Russian crude largely used by its domestic population of 1.4 billion Indians and businesses." Experts say the EU action is mostly symbolic and won’t seriously shake India’s energy trade or its exports to Europe. Garima Mohan from the German Marshall Fund said, "The EU's sanctions lacks bite and will be difficult to enforce." She added India can easily switch to refining other oils like Iraqi crude. Jacob Funk Kirkegaard from Brussels’ Bruegel think tank agreed, saying, "It is definitely an escalation by the EU. But I would also say it won't hurt trade negotiations." The real twist is the US, which threatens to hit Indian goods with tariffs up to 50% due to India’s closeness with Russia. Experts believe this US pressure might actually push India closer to the EU. Kirkegaard explained, "India now needs a deal with the EU a little more than when it had arguably better ties with the US." Mohan added, "India needs reliable and predictable economic partners, it needs investments," especially after the US tariff threats. The EU also plays a softer game, especially on agriculture, which employs nearly 44% of India's people. Kirkegaard pointed out, "The EU understands India's political and economic sensitives in the agriculture sector far better than Trump." If India reduces Russian oil imports because of US tariffs, it could hit Russia’s war funds, which aligns with EU and Ukraine. Yet an Indian diplomat warned that cutting Russian oil supplies might raise global prices and hurt everyone. Kirkegaard also questioned why the US hasn’t threatened China, which buys even more Russian oil. Overall, experts say EU sanctions on Nayara Energy won’t change Putin’s moves, but US actions might influence India’s choices more. So while the EU-India relationship stumbled in mid-2023, the push for a free trade agreement still looks strong. The year started with fireworks, and the final act could bring New Delhi and Brussels even closer, thanks to shifting global politics.

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Tags: Eu-india trade, Sanctions on india, Russian crude oil, Us tariffs, Nayara energy, Free trade agreement,