India Bets on the EU: a Trade Agreement with Global Strategic Reach

In an international context marked by trade fragmentation, the reconfiguration of supply chains and rising geopolitical tensions, India has decided to strengthen its economic ties with the European Union. After years of complex and prolonged negotiations, both parties have made decisive progress toward an ambitious free trade agreement aimed at consolidating one of the world’s largest economic partnerships, bringing together two blocs that together account for nearly a quarter of global GDP and a potential market of almost 2 billion people.

Trade relations between India and the EU were already significant prior to the agreement. The European Union has established itself as one of the Indian economy’s main trading partners, with bilateral goods trade well exceeding USD 130 billion annually, alongside a growing exchange of services in areas such as information technology, transport, and business and financial services. This new framework seeks to deepen and modernize that relationship by removing longstanding barriers that have limited mutual market access.

At the core of the agreement is a progressive reduction—and in many cases the elimination—of tariffs on the majority of traded goods. For European companies, this translates into more competitive access to the Indian market, particularly in industrial, chemical, pharmaceutical and machinery sectors that have traditionally faced high import duties. For India, the pact opens the door to a stronger presence of its exports in the European market, especially in textiles, apparel, leather, agri-food products, jewellery and labour-intensive manufactured goods.

One of the most sensitive aspects of the agreement has been the automotive sector, where India has maintained some of the highest tariffs in the world for decades. The compromise reached provides for a gradual and controlled liberalisation, balancing the protection of domestic industry with the need to attract investment, technology and higher levels of competition. These commitments are complemented by provisions on technical standards, customs procedures and the reduction of non-tariff barriers, all aimed at facilitating trade and lowering costs for businesses.

Beyond goods, the agreement has a strong strategic dimension. It includes chapters on services, investment, intellectual property and sustainability, as well as mechanisms to promote regulatory cooperation and the mobility of qualified professionals. For India, this strengthens its ambition to position itself as a key player in high value-added sectors such as the digital economy, technological innovation and advanced manufacturing. For the EU, closer ties with one of the world’s fastest-growing economies represent a key opportunity for diversification in an increasingly uncertain global environment.

From a geopolitical perspective, this rapprochement also reflects a convergence of interests. Both New Delhi and Brussels aim to reduce excessive dependencies, strengthen alliances with like-minded partners and defend a rules-based trading system. In this sense, the agreement goes beyond purely economic considerations and is widely seen as a clear signal of India’s growing weight in the international economic balance and of Europe’s determination to strengthen its ties with South Asia.

Ultimately, India’s bet on the European Union is not only commercial but also strategic: a decision that could redefine its position in the global economy over the coming decade.