EU’s Ursula von der Leyen wants to seal investment agreement with India, calls it ‘missing puzzle’

European Commission President Ursula von der Leyen has once again called for an investment agreement between India and the European Union (EU), describing it as the “missing piece of the puzzle” in the cooperation plans of the two economies.

Ms von der Leyen was speaking at the European Industry Roundtable in Gothenburg, Sweden, where Prime Minister Narendra Modi also spoke.

The investment agreement, which was negotiated along with the trade agreement, could not be concluded because the two sides could not agree on some important issues; The most important of these was the resolution of disputes.

‘Half of the equation’

“But trade is only half of the equation,” Ms. von der Leyen said. “Our next step must be to conclude an investment agreement. This is the missing piece of the puzzle in our strengthened economic cooperation, especially in a world where supply chains are being reshaped and economic security challenges us like never before. Deepening our investment ties will help us reduce risks and diversify.”

Mr. Modi did not mention the investment agreement during his speech but instead emphasized the benefits of the trade agreement and other agreements signed between the EU and India.

“The India-EU FTA will create new opportunities for industries, investors and innovators,” Mr. Modi said.

“The Security and Defense Partnership and Mobility Agreement has given new strength to our strategic and people-focused partnership,” he added. “The India-EU Trade and Technology Council has further deepened our cooperation. We are working together in areas such as digital technology, clean energy, semiconductors, resilient supply chains and innovation.”

‘The trade agreement opened the door’

In the 26 years between January 2000 and December 2025, European countries invested just over $110 billion in direct investment in India; this accounted for nearly 14% of the total foreign direct investment attracted by India during this period.

However, it has been revealed that there have been serious fluctuations in capital inflows from Europe in recent years.

For example, foreign direct investment from Europe fell from approximately $10.6 billion in 2024 to approximately $5.5 billion in 2025, with a significant increase from approximately $5.3 billion in 2023.

As a result, Europe’s share in India’s total foreign direct investment has fallen to less than 10% in 2025, from around 20% the previous year; In 2023, it is about 13%. Ms von der Leyen stated that an investment agreement would increase investment flows.

“Basically, it can be said that the trade agreement opens the door,” Ms von der Leyen added. “An investment agreement guides us in this regard.”

On Tuesday, May 19, Mr Modi will meet Nordic leaders from Denmark, Sweden and Finland at the Nordic India Summit, where the India-EU free trade agreement will be discussed again.

Norway and Iceland, which are part of the Norway Summit, are EFTA countries that signed a separate Trade and Economic Partnership Agreement (TEPA) with India in 2024, which comes into force in 2025. The event will also include an assessment of the progress of this agreement so far.

Compliance and dispute resolution

According to many who follow negotiations between India and the European Union, the biggest factor holding back the investment deal was differences in dispute resolution between the two economies. Other issues relate to concerns about land acquisition, judicial protections and exit provisions.

India unilaterally ended almost all Bilateral Investment Treaties (BITs) in 2017 and then announced a new approach to resolving disputes that created uncertainty among foreign investors.

The main problem was that under PITs, disputes regarding foreign investments were resolved through arbitration in a third country. The new framework aims to replace this with an India-centric dispute resolution process.