A new world in trade: How Europeans can make the most of the India deal

Problem

The conclusion of the EU-India free trade agreement (FTA), announced on the sidelines of the EU-India summit in New Delhi today, comes at a moment of profound geopolitical and economic uncertainty. Global trade liberalisation is reversing, supply chains are securitised and confidence in American leadership is collapsing amid China’s growing influence. ECFR polling shows that majorities in many significant global nations now anticipate Chinese influence to expand over the next decade. European leaders want a new era of geopolitical diversification, seeking new partners to compensate for the loss of the US and solve problems in a fragmented newly world.

These shared strategic interests mean the EU and India have now taken significant steps to move beyond relations that have historically underperformed. After nearly 20 years of stalled negotiations, the new FTA is a significant achievement. It includes major tariff cuts of more than 36 per cent on European food products as well as European cars (a gradual reduction from 110% to 10%, with a quota of 250,000 vehicles a year). The tariff changes affect roughly 96–97 % of the trade value between the two economies, with savings estimated at around €4bn a year in duties on EU exports alone.

But even with the FTA agreement now concluded, unresolved friction remains. This includes around sustainability standards—notably, the EU’s carbon border adjustment mechanism (CBAM) as well as data governance, investment screening and intellectual property. Without effective implementation mechanisms, the partnership risks reverting to episodic summitry rather than becoming a durable pillar of European de-risking and strategic autonomy.

Solution

The EU should now treat the new FTA as a strategic platform, not an endpoint. First, Brussels should quickly use the new agreement to develop flagship supply-chain projects in sectors where mutual dependence is already high. These include pharmaceuticals—India supplies around 20% of the EU’s generic medicines—clean energy technologies and semiconductors. These projects should be backed by tangible EU financial instruments, such as Global Gateway guarantees and de-risking incentives, to demonstrate political commitment beyond regulatory cooperation.

Second, the EU should upgrade the EU-India Trade and Technology Council. The current TTC format has under-delivered and requires clearer mandates, measurable outcomes and annual reporting. Partly this means stronger political leadership. But it will also require greater openness to businesses for high-profile technology partnerships, supported by structured matchmaking, research input and civil society engagement.

Third, the EU should adopt a pragmatic approach to sustainability and regulatory divergence. On CBAM, transitional arrangements, technical assistance and structured dialogue should take precedence over rigid conditionality. Mutual recognition and flexible implementation—rather than full regulatory convergence—will be key to political sustainability.

Finally, Brussels and New Delhi should institutionalise regular coordination across trade, security and foreign policy, including joint initiatives in the G20, WTO and climate negotiations. Acting together, the EU and India—representing nearly 2 billion people and around 25% of global GDP—can exert disproportionate influence on contested global rule-making.

Context

The EU-India FTA is one of the largest trade agreements concluded in recent years, covering goods, services, investment, digital trade and regulatory cooperation. It reflects a shared recalibration towards strategic autonomy amid unreliable US leadership and a more coercive China. For the EU, India is central to diversification and de-risking; for India, Europe is a complementary partner alongside America, China and regional groupings. If effectively implemented, the agreement could become a template for 21st-century trade governance focused on resilience, diversification and standards-setting—rather than narrow market access alone.