India-Sweden Strategic Compass: A Bi-Monthly Newsletter; November-December 2025

The defining story of India–Sweden relations in 2025 was not a headline-grabbing summit, but a quieter and more consequential process: the steady thickening of institutions, business-led innovation, and political engagement. Together, these trends are pushing the partnership toward 2026 as a genuinely strategic relationship—one anchored in the green transition, industrial competitiveness, and frontier technologies.

Quiet diplomacy, durable gains. High-level political engagement remained warm and regular despite the absence of a prime ministerial visit. Sweden’s Foreign Minister, Maria Malmer Stenergård, participated in the Raisina Dialogue 2025 and held ministerial meetings in India, while parliamentary exchanges also expanded. Such interactions help build long-term
consensus on technology governance, trade rules, and a shared commitment to a rules-based international order—the often-unseen scaffolding of durable partnerships. As Jan Thesleff, Ambassador of Sweden to India, said: “Our collaboration is future-oriented, anchored in innovation, green transition, and sustainability.”

Economic diplomacy became more focused and programmatic. Commerce Minister Piyush Goyal’s visit to Sweden and the 21st meeting of the Indo-Swedish Joint Commission for Economic, Industrial and Scientific Cooperation signaled a clear intent to keep trade, investment, and industrial collaboration on a predictable, institutional track rather than relying solely on corporate momentum.

From slogans to pilots

The most notable shift in 2025 was the move from innovation rhetoric to applied experimentation. The Ericsson–Volvo Group–Bharti Airtel collaboration on digital twins and extended reality over 5G Advanced emerged as a concrete India-based testbed for Industry 4.0 and 5.0, linking advanced connectivity to skills, productivity, and manufacturing transformation. Beyond flagship firms, the Sweden–India innovation ecosystem continued to deepen through Vinnova–DST cooperation and company-driven calls, sustaining co-development in sustainability- linked and competitiveness-enhancing technologies.

Economic fundamentals also strengthened. Bilateral goods trade reached roughly USD 6.96
billion. Sweden remains a significant investor, with cumulative FDI equity inflows of about USD 2.6 billion, and its corporate footprint in India has expanded to around 280 companies. Key sectors attracting Swedish FDI include automobiles, industrial machinery, engineering, electrical equipment, and metallurgical industries. SMEs are expected to lead the next wave of Swedish investments in India.

Indian firms too are steadily increasing their presence in Sweden. Defence-industrial signals, including Saab’s manufacturing footprint in India, point to a shift toward capability-building rather than transactional commerce. Complementing these developments, the India-European Free Trade Association Trade and Economic Partnership Agreement (TEPA) entered into force on October 1, further enhancing trade, investment, and employment opportunities in India. Coversations at the second annual India–Sweden Industry Transition Partnership (ITP) Summit (June 2025), underscored the shared ambition to drive real progress in hard-to-abate sectors. The ITP continues to grow as a global model for sustainable industrial development and bilateral cooperation.

Where the partnership needs to do more

Despite these gains, three gaps persist. First, strategic alignment remains limited. Sweden’s NATO membership and India’s Indo-Pacific priorities offer scope for deeper dialogue on maritime security, critical infrastructure resilience, and defence innovation, but the agenda remains largely economic. Second, mobility and talent pipelines—researchers, engineers, doctoral candidates, and start-up talent—have yet to become a flagship pillar. Third, while trade is grow growing, value chains remain shallow beyond marquee firms; SMEs, standards cooperation, and predictable regulatory pathways need sustained attention.

A bridge to Europe

Beyond the bilateral, Sweden can serve as an “inside-the-EU” accelerator for India on green
industrial transition and technology standards. With India–EU trade negotiations facing friction—particularly over climate-linked instruments such as the Carbon Border Adjustment Mechanism—India–Sweden cooperation on industrial decarbonization, green steel and cement, and clean-tech commercialization offers practical templates that could ease broader engagement.

If 2025 proved the partnership through projects, 2026 must be about scale—deeper talent mobility, stronger R&D-to-market pathways, and a strategic conversation that finally matches the ambition of the economic and technology agenda already underway.