The conglomerate of 15 European nations with more to join the bloc next year, the European Union has emerged as India's single largest trading partner accounting for more than one-fifth share in both exports and imports of world's fourth largest economy in terms of Purchasing Power Parity. With the accession of another 10 states on May 1, 2004, the EU bloc will become a trade giant in the world. EU-India trade registered an impressive 150 percent growth--from € 9.97 billion in 1991 to € 25.52 bn in 2001.

India's major trading partners in EU are UK, accounting for 21.4 percent of the two-way trade, followed by Germany with 20.7 percent, Bel-Lux with 19.3 percent, and Italy with 11.5 percent. Since their first bilateral summit in Lisbon in 2000, the Indo-EU trade relations got added momentum with both sides being committed to exploit the potential and scope of their economic relations. Poverty alleviation is the guiding principle of the Indo-EU cooperation. "India's overriding challenge for the first decade of the new millennium is to lift between two to three hundred million of its citizens out of poverty. All of India's cooperation partners, including the EC, subscribe to this objective and are seeking to mobilize their particular strength towards helping the Indian government to achieve this goal", underpins EC's country strategy (2002-06) paper on India. To build the "human capital" of the world's largest democracy, the EC would assist India by "dedicating its resources to (a) making elementary education universal; (b) improving health services in favour of the hitherto deprived population groups; and (c) restoring and safeguarding a healthy environment." The EC would also help Indian authorities create an "enabling economic environment".