Why India and Europe Should Strike a Clean Tech Grand Bargain
As the recent meeting of the EU-India Trade and Technology Council (TTC) demonstrated, Brussels is aware that it needs to get itself out of the dependency spiral that is tightening the noose around Europe’s capacity to act.
FollowBy Janka Oertel, Director, Asia Programme; Senior Policy Fellow, European Council on Foreign Relations: Geopolitical turmoil and the United States’ dynamic approach to trade policy and alliances have caught Europeans off guard. Despite having eight years to prepare for day one of Trump 2.0, they did not fully anticipate the implications of his return. Dependence on U.S. security, China trade, and Russian energy were still too comfortable to change—until the crises have hit on all fronts simultaneously. The level of panic is thus high.
As the recent meeting of the EU-India Trade and Technology Council (TTC) demonstrated, Brussels is aware that it needs to get itself out of the dependency spiral that is tightening the noose around Europe’s capacity to act. The EU wants to move forward quickly and strike a new trade deal with India this year to demonstrate global interest in not only working with Europe but also in rules-based trade relations and diversity of supply chains. But there is scope to be more ambitious and to strike a clean tech grand bargain that would dramatically improve the competitive positions of Europe and India alike.
Europe’s problems are, in large part, self-inflicted. Trump 1.0 was not easy to navigate. The COVID-19 pandemic further exacerbated Europe’s economic problems and latent security concerns at the time. After Joe Biden’s presidential election, Europeans quickly re-lapsed into paying lip-service to greater self-reliance and failed to follow up decisively with investment and political will for preventive de-risking. During Trump 2.0, Europe faces a devastating war at its doorstep and a severe economic crisis induced in part by rising energy prices. At the same time, it must grapple with even greater pressures emanating from Chinese overcapacities and assertive trade practices.
Beijing is both a direct security threat for Europe, given its active support for Moscow in its war in Ukraine, and the number one long-term challenge for Europe’s economic competitiveness. Chinese companies dominate the clean tech supply chain, exacerbating trade-offs between decarbonization and the survival of Europe’s manufacturing industry. The Chinese leadership has demonstrated the desire and capacity to achieve dominance through full vertical integration of supply chains, challenging Europe’s ability to compete in precisely the industries of greatest relevance for jobs, innovation, and resilience: vehicles, wind, grid infrastructure, robotics, telecommunications, and more. Europe’s future as a manufacturing power is at stake.
Beijing’s efforts, coupled with Trump’s tariff ambush abroad and clean tech divestment at home, simultaneously enhance the pressure on European industry. The United States is becoming a less attractive export destination and, for industries like wind or electric vehicles, a place of potentially sunk investment. A shrinking U.S. market for clean technologies further squeezes European industry players that had benefitted from the previous U.S. administration’s spending spree within the scope of the Inflation Reduction Act.
For Europe and India, single-country dependencies and high geographic concentration of key parts of the supply chain are no longer just a byproduct of perceived efficiency gains of globalization but a security and economic risk. Chinese manufacturers, for example, have captured 40 percent of India’s wind market in just a few years. If this trend continues globally, alternative players such as Vestas, Enercon, or Siemens Gamesa will have a hard time surviving.
For both Europe and India, the future lies in clean energy, technological development, and higher self-sufficiency. To achieve this, both sides can work together to diversify clean tech supply chains away from Chinese dominance and create alternatives for manufacturing, and establish hubs for research and development. The joint declaration of the last TTC meeting is a start. However, its focus on electric vehicle battery recycling, marine litter, and waste to hydrogen technologies, as well as a commitment of €60 million, falls short of the necessary level of ambition.
Europe and India need to work with great urgency towards investing, for example, in battery manufacturing and fully diversifying the solar supply chain as well as strengthen the offshore wind industry. On solar panel production, Europe will be a market, not a competitor. But in the wind power and battery industry, fair competition will be beneficial for both Europe and India.
Working together to facilitate reciprocal market access and joint innovation is key to creating production capacity at scale and a market size that can rival China’s dominance in these clean technology value chains. The availability of alternatives to China-dominated supply chains is attractive to all those who strive for resilience and redundancy at a time of increasing geopolitical confrontation—including many advanced and emerging economies globally.
India’s potential as a leader in clean energy installations has grown in 2024, doubling the amount of solar installations compared to the previous year and seeing a more than 20 per cent increase in wind power installations. However, there is room for growth: In terms of solar power Europe has had twice the level of installations and five times as much on wind power in 2024. India aims to industrialize on a much less carbon-intensive path than advanced economies to become a clean energy superpower. Having trusted partners can help. From foreign direct investments and technology to research and development partnerships, from solar and wind to emerging biosolutions industries—Europe has a lot to offer.
An ambition for a trade agreement between Delhi and Brussels would be an important and pragmatic start for diversity in supply chains, more competitive markets, and greater independence through close collaboration. But to succeed, member states will have to seize the geopolitical moment and throw their weight behind the process to make de-risking, diversification, and de-carbonization not only a theoretical option but a desirable reality.
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This article is part of a series exploring “Sambhavna”—opportunities in technology, the theme of Carnegie India’s ninth Global Technology Summit, to be held from April 10-12, 2025, with public sessions on April 11-12, co-hosted with the Ministry of External Affairs, Government of India. For more information about the summit and to register, visit https://bit.ly/JoinGTS2025AN.
Janka Oertel, Director, Asia Programme; Senior Policy Fellow, European Council on Foreign Relations
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