In News:

• In September 2025, India and the European Union adopted the EU–India New Strategic Agenda 2025, a comprehensive vision document aimed at elevating their partnership into a transformative global framework for the next decade.
• Building upon the 2020 EU–India Strategic Partnership Roadmap, the new agenda broadens cooperation in sustainable development, digital governance, supply-chain resilience, connectivity, and defence.
• It is structured around five core pillars: Prosperity and Sustainability; Technology and Innovation; Security and Defence; Connectivity and Global Issues; and Enablers Across Pillars, reflecting a multidimensional partnership.
• A landmark development under this agenda is the decision to link the Indian Carbon Market (ICM)—formally India’s evolving Carbon Credit Trading Scheme (CCTS)—with the EU's Carbon Border Adjustment Mechanism (CBAM). This integration allows carbon prices paid within India to be deducted from CBAM levies at the EU border, potentially shielding Indian exporters from double taxation and incentivising early decarbonisation. If successfully implemented, the linkage would represent one of the most significant North–South climate cooperation efforts, setting a precedent for global carbon market integration.

Key Features of the New Strategic Agenda 2025

1. Prosperity & Sustainability

The agenda emphasises climate cooperation and green transition pathways:

• Joint clean energy transition initiatives including renewable energy, green hydrogen, and sustainable finance.
• Expansion of the Green Partnership, focused on technology transfer, co-investment, and carbon neutrality strategies.
• The carbon market linkage aims to align India’s carbon pricing framework with global standards and reduce trade frictions arising from CBAM enforcement.

2. Technology & Innovation

The EU and India plan deep cooperation across critical technologies:

• Collaboration in semiconductors, 5G/6G standardisation, quantum technologies, and AI ethics frameworks.
• Development of digital public infrastructure aligned with principles of privacy, transparency, and data protection.

3. Security & Defence

The agenda institutionalises a Security and Defence Partnership:

• Joint naval exercises, maritime domain awareness, and cybersecurity operations in the Indo-Pacific.
• Greater strategic alignment in the context of China’s increasing assertiveness and the need for secure maritime routes.

4. Connectivity & Global Issues

Cooperation includes:

• The EU’s Global Gateway Initiative and India’s participation in the India–Middle East–Europe Economic Corridor (IMEC).
• Infrastructure connectivity, supply-chain resilience, and sustainable transport systems.

5. Enablers Across Pillars: Enhanced mobility, education and research exchanges, and institutional dialogues strengthen long-term engagement.

Significance of Linking ICM with CBAM

The linkage is historically significant because it allows Indian carbon credits to be recognised within the EU’s border adjustment framework. This could:

• Prevent double carbon penalties on Indian exporters entering the EU market.
• Reward early decarbonisation by reducing CBAM-related costs.
• Provide a model for climate cooperation between developed and developing economies, addressing equity concerns embedded in global climate governance.