EU and India seal landmark trade deal amid shifting geopolitical balance

Written by Frode Skar, Financial Journalist.

After almost two decades of complex and often stalled negotiations, India and the European Union have finalized a comprehensive free trade agreement. Described by EU leaders as the “mother of all deals,” the pact effectively creates a combined market of around two billion people.

Why the timing matters

The renewed momentum behind the agreement reflects a changing global landscape. Talks intensified following Russia’s invasion of Ukraine in 2022, when both sides reassessed their strategic dependencies. At the same time, rising protectionism and the use of trade as a geopolitical tool by major powers have increased the urgency for diversified partnerships.

India’s search for export stability

For India, the agreement offers relief to export-oriented industries hit by punitive tariffs elsewhere, particularly in textiles and garments. Access to the EU market provides an alternative outlet for growth and employment as global trade conditions become more volatile.

European industries gain access

European manufacturers, especially in sectors such as automotive and wine, stand to benefit significantly. Tariffs that once made the Indian market largely inaccessible will be sharply reduced, opening new commercial opportunities for EU companies.

A geopolitical message beyond trade

Beyond economics, the deal sends a broader political signal. The EU and India present themselves as partners committed to cooperation and rules-based trade, positioning the agreement as a counterweight to increasingly confrontational economic policies among global powers.

Assessment

The EU–India trade agreement represents more than a commercial milestone. It reflects a strategic alignment between two major economies seeking stability, diversification and autonomy in an increasingly polarized global system. While the economic impact will unfold over time, the geopolitical implications are already clear.