Continental Bet

After nearly a decade of drift, India and the European Union have decided to sprint ahead. The conclusion of the long-awaited free-trade agreement ever since talks were relaunched in June 2022 after a nine-year hiatus, marks one of the most consequential economic alignments of the decade. Branded with some hyperbole as the “mother of all deals,” the Indo-EU pact aims to knit together a market of nearly two billion people and roughly a quarter of global GDP.

The timing is deliberate. The deal was unveiled during a high-profile visit to India by António Costa, president of the European Council, and Ursula von der Leyen, president of the European Commission, who were also chief guests at India’s 77th Republic Day celebrations. Symbolism aside, the message was that Europe and India want to anchor their partnership in commerce at a moment when geopolitics is intruding ever more crudely into trade.

For India, bearing the brunt of Trump’s tariffs, the economic case is straightforward. The agreement is expected to eliminate tariff and non-tariff barriers on over 90 percent of Indian goods entering the EU’s 27-member market. Labour-intensive sectors like textiles, leather, chemicals, electronics and jewellery stand to gain most. These industries do not directly threaten European manufacturers, but they have long suffered from a structural disadvantage. Indian exporters have been competing against duty-free and quota-free shipments from least-developed countries such as Bangladesh. The FTA is expected level that field overnight.

The EU is already India’s largest trading partner in goods, with bilateral trade worth around $135bn in 2023–24. Preferential access to wealthy markets such as Germany, France, Italy and Spain could turbocharge India’s export ambitions just as it seeks to absorb millions into formal employment. If ‘Make in India’ is to mean anything beyond slogans, it needs predictable access to demand and Europe offers precisely that.

The EU bloc is in the midst of a strategic rethink, driven by supply-chain shocks, the war in Ukraine and Trump’s erratic trade instincts. ‘De-risking’ has become Brussels’ watchword, diversifying away from excessive dependence from China. India, with its scale, democratic credentials and growing manufacturing base, fits that bill better than most alternatives.

In the past, Europe’s regulatory zeal has often clashed with India’s developmental pragmatism. India, for its part, remains wary of opening sensitive sectors too quickly. The success of this pact will depend less on grand announcements than on how flexibly both sides implement it.

That said, the political alignment looks unusually strong. For Europe’s leaders, India offers not just growth but strategic ballast in an increasingly multipolar world.

At a time when protectionism is creeping back into fashion and multilateral trade talks remain moribund, a deep bilateral deal of this scale is a reminder that globalisation is not dead. And if the Indo-EU agreement lives up to its promise, it could definitively bind two large, pluralistic economies closer together at a moment when the global order is wobbling.