India and Europe Seal Landmark Trade Deal Amid Shifting Global Alliances
India and the EU have finalised a long-awaited Free Trade Agreement, marking a shift in their decades-old strategic partnership. The deal arrives amid global trade uncertainty, particularly as the US revisits its own trade terms with Europe. Yet questions remain over whether this agreement will bring lasting change or simply reflect short-term necessity.
The 2004 India-EU Strategic Partnership initially promised deeper ties but saw limited progress, with trade growing steadily yet failing to break through long-standing barriers.
The new agreement covers tariff cuts, easier mobility for professionals, defence collaboration, and sustainability targets. On paper, it is the most ambitious deal yet between the two sides. But its success depends on India aligning with the EU's strict regulatory standards—a challenge given the country's event-driven diplomatic approach.
Negotiating with the EU has never been straightforward. India must navigate 27 member states, the European Commission, and a complex web of regulations. This contrasts sharply with its more flexible trade deals, such as those with the UAE, Australia, and EFTA, where exports surged quickly after agreements were signed. Meanwhile, India's share of EU trade has remained stuck below 3% for decades, even as china deepened its integration into global supply chains.
Europe's growing interest in India stems from broader geopolitical shifts. china's assertiveness, fragile supply chains, and the fallout from russia's war in ukraine have pushed the EU to seek alternative partners. For india, however, europe has often been an afterthought. Its foreign policy has traditionally focused on soviet-era ties, competition with china, and relations with the us.
The timing of the deal is no coincidence. Renewed us trade policy volatility—highlighted by donald trump's return to the white house in 2025 and his threats of eu tariffs over greenland—has added urgency. Facing potential disruptions, both india and the eu saw an opportunity to strengthen economic links.
The agreement sets high ambitions, but its real impact hinges on implementation. India must push through domestic reforms to meet eu standards and develop supply chains that genuinely complement europe's needs. Without these steps, the partnership risks remaining incremental rather than transformative.
For now, the deal reflects a pragmatic response to current pressures rather than a deep strategic realignment. Its long-term value will depend on whether both sides move beyond rhetoric to tangible cooperation.
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