The India-EU trade deal is also a strategic turning point

Last week, India and the European Union (EU) achieved what, until just a year or two ago, many observers considered impossible: meeting halfway to conclude a long-elusive trade agreement. Negotiated, stalled, revived and reimagined over a quarter of a century, the deal represents far more than a technical breakthrough on tariffs. It marks a strategic inflexion point in what could become one of the most consequential partnerships to stabilise an international order that is marked by rapid, uncertain and conflictual transition.

A meeting point with a risk-averse Brussels

The commercial breakthrough did not emerge from a vacuum. It is the result of two drivers — one political and the other geopolitical. First, in an example of how summit diplomacy does pay off, both sides have been engaging at the highest level for the last 10 years, beginning with Prime Minister Narendra Modi’s visit to Brussels in 2016.

The unprecedented frequency of meetings, which included the India-EU leaders’ summit in 2021, allowed for a frank exchange of perspectives that built trust and enabled the pursuit of the highest-hanging fruit despite repeated failures since 2007. This mutual political trust mattered at home because it empowered the Indian and European leadership to invest significant personal and political capital to overcome a variety of internal obstacles and risks.

The Modi government worked with, rather than against or around, various domestic stakeholders and their protectionist impulses to explain why the EU offers a qualitatively different economic partner than next-door China. Previous trade deals with the United Kingdom or Australia helped create momentum, assess roadblocks and build industry support. And on the EU side, the tandem between the Commission and the Council laid clear political guidelines that pushed the otherwise risk-averse Brussels bureaucracy to move beyond rigid free trade agreement templates. With this political direction, negotiators finally found common ground.

Second, and more importantly, this deal is driven by the urgency of responding to an international system that is shaking, if not collapsing. The agreement is the most tangible product of the extraordinary geopolitical churn unleashed by U.S. President Donald Trump’s commercial offensives, but also the continued coercion and economic security threats posed by China and Russia.

The larger picture

Driven by political and geopolitical factors, the resulting economic agreement is best understood not as the culmination of a mere trade negotiation but also as the foundation of a broader EU-India strategic realignment. But trade alone will not sustain this convergence. If the India-EU partnership remains confined to tariffs and market access, it risks becoming a tactical adjustment rather than a durable strategic shift.

To avoid this fate, New Delhi and Brussels must now move quickly to flesh out the other dimensions of their strategic partnership enunciated during last week’s summit, most notably in defence and security, energy, technology and mobility.

In defence and security, the logic for deeper cooperation is increasingly compelling. India and the EU have a stake in ensuring maritime stability and freedom of navigation. There are growing opportunities for joint military exercises, information sharing, and the development of security capacity among Indo-Pacific states. The agreement reflects an interest in moving beyond ad hoc engagement toward institutionalised cooperation, coupling defence industrial interests with financing, trade and technology priorities.

Energy cooperation is equally critical. Europe’s push for energy diversification and decarbonisation intersects with India’s need for affordable, scalable, and sustainable energy solutions. Joint investment in green hydrogen, renewable technologies, and resilient energy infrastructure could anchor long-term interdependence while advancing shared climate goals.

Technology represents perhaps the most consequential frontier as global technology governance fragments along geopolitical lines. India and the EU have an opportunity to shape standards and norms that reflect values without stifling innovation. Cooperation on semiconductors, digital public infrastructure, artificial intelligence and data governance could reduce mutual vulnerabilities and enhance strategic autonomy on both sides.

Finally, the mobility of students, researchers and skilled workers will be essential to translating political alignment into societal and economic depth.

Addressing long-standing frictions over visas and professional recognition would not only strengthen people-to-people ties but also support innovation ecosystems across both partners.

Taken together, these sectors offer a path toward genuine India-European interdependence. Without such multi-sectoral investment, the current alignment risks remaining contingent on external pressures rather than internalised interests.

Foundation to build on

India and the EU now have a rare opportunity to give practical meaning to their old mantra of multipolarity that dates back to the 2000s. In coordination with other middle powers, New Delhi and Brussels can help deliver growth and security that is rooted in openness, resilience and shared democratic values. This will have to be a partnership that delivers tangible public goods across the Indo-Pacific — to keep China in check — and across the Global South, which seeks reliable development partners.

In an era defined less by alliance blocs than by issue-based coalitions, the India-EU convergence — if sustained and deepened — may finally emerge as one of the pillars of a more stable international system.

The economic deal is a start. The strategic test now lies in what follows.

Constantino Xavier is Senior Fellow, Centre for Social and Economic Progress (CSEP). The views expressed are personal

Published – February 07, 2026 12:08 am IST