Alessia Berardi
The European Union and India have concluded negotiations on a landmark free trade agreement (FTA), marking a major milestone nearly two decades in the making. Once ratified, the deal is expected to enter into force in early 2027.
Already, the India-EU trade is substantial, with the latter being India’s second largest trading partner. Bilateral goods trade between the two stood at €120.2bn and services trade at €66.6bn, for the year 2024. Indian exports to the bloc totaled €108.8bn.
Alessia Berardi, Head of Global Macroeconomics at the Amundi Investment Institute notes “EU’s automobile manufacturers will gain better access to a market long dominated by domestic and Japanese brands. The EU’s share of India’s car market currently stands at just 4%, suggesting significant potential upside for European exporters.
“Agricultural sector is a sensitive issue for both the EU and India but the EU received concessions on some agri-foods such as alcoholic beverages, with additional benefits on consumer staples products.
“Notably, tariffs on imported alcoholic beverages and wine will drop from 150%, providing a substantial opening for European producers, particularly from France, Italy, and Spain.”
The agreement’s timing is strategic: it reinforces supply-chain diversification away from China, hedges against U.S. tariff uncertainty, and underpins Europe’s effort to secure trusted partners in a more fragmented global economy.
She adds, “The agreement also illustrates the growing importance of “middle powers” in a more fragmented international system, where influence is increasingly exercised through diversified partnerships rather than tight bloc alignments. With great power competition among the US, China and Russia intensifying, states such as India and the EU’s larger members are using trade, technology and security agreements to preserve strategic autonomy and avoid over dependence on any single partner.”
In this context, the India–EU FTA functions as a hedging and diversification tool for both sides: Brussels gains a scalable, democratic partner in Asia to underpin economic resilience and clean tech supply chains, while New Delhi reduces exposure to volatile US tariff policy and to China centric manufacturing networks.
Recent analysis of global influence trends suggests that while traditional superpower reach has plateaued, middle and mezzanine powers are expanding their room for manoeuvre by multiplying cross regional agreements and issue specific coalitions. The parallel push by countries like Canada to deepen ties with India in areas such as critical minerals, uranium and LNG, partly to lessen dependence on the US market, fits the same pattern of middle power diversification.
For India, whose oil imports from Russia remain significant at around 1.3 million barrels per day despite declining from peaks near 2 million, this strategy is about balancing long standing relationships with a wider set of economic and political partners.