Opinion | Art Of The Deal: As Trump Wavers, India Is Writing Its EU Playbook

When German Chancellor Friedrich Merz landed in Gujarat this week and called for concluding the EU-India free trade agreement (FTA) by the end of January 2026, it signalled more than routine diplomacy. In a world reshaped by sanctions, industrial policy, and supply-chain realignments, Europe's outreach to India is now as strategic as it is geoeconomic. The high-level visit once again highlights that as the United States wavers between protectionism and partnership, New Delhi is seeking to broaden its trade horizons, with Europe emerging as the key pivot.

Why EU Deal Now Defines India's Trade Moment

Europe's courtship of India is driven by mutual interests in economic partnerships. The EU-India FTA is in the final stages of negotiations, with both sides seeking to bridge differences on sustainability standards, digital trade, and labour mobility. For Europe, it is about de-risking supply chains away from China and securing access to a large democratic market. For India, the deal offers access to the EU's high-value consumer base, new technology partnerships, and credibility as a manufacturing and regulatory hub capable of meeting global standards. The stakes are immense: the EU is one of India's largest trading partners, accounting for nearly 12% of its total trade.

Momentum has been built by earlier European deals. The India-UK Comprehensive Economic and Trade Agreement (CETA), signed in July 2025, was New Delhi's first major trade pact with a G7 economy in over a decade. It grants duty-free access for 99% of Indian exports to the UK. The India-EFTA Trade and Economic Partnership Agreement (TEPA) went further, coupling tariff cuts with a USD 100 billion investment commitment over 15 years from Switzerland, Norway, Iceland, and Liechtenstein - an unprecedented investment-linked model. It illustrates how India's trade policy has matured from defensive tariff management to an outward-facing investment narrative.

Indo-Pacific, Gulf and the New Frontiers

If Europe is India's most optimistic economic engagement at the moment, relations with the United States have been more complicated. Bilateral trade volumes continue to rise, yet there is still no formal India-US trade agreement despite years of dialogue. High tariffs and unresolved market-access disputes persist, and Washington's 2025 imposition of punitive duties on select Indian exports rekindled friction. Both sides continue to work through various channels, but India's calculus is shifting. Rather than wait for a breakthrough with Washington, New Delhi is hedging its bets by retaining the US as a strategic partner while expanding ties with others to insulate its export base from the current unpredictability in American policy.

That diversification is most visible in the Indo-Pacific. After India walked away from the Regional Comprehensive Economic Partnership (RCEP) in 2019, its alternative architecture is taking shape through bilateral and minilateral pacts seven years later. The India-New Zealand FTA, concluded in December 2025 after a decade-long pause, opens duty-free corridors for Indian exports and enhances mobility for professionals. With Australia, India is deepening the interim Economic Cooperation and Trade Agreement (ECTA) into a comprehensive CECA, targeting services, investment protection, and critical-mineral supply chains. Meanwhile, an ongoing review of the ASEAN-India Trade in Goods Agreement (AITIGA) aims to fix imbalances that disadvantaged Indian manufacturers. Undoubtedly, India is rebuilding its regional competitiveness on its own terms, engaging selectively but assertively with the Indo-Pacific's trade architecture.

West Asia is where India's trade diplomacy intersects most closely with its energy and strategic interests. The India-Oman Comprehensive Economic Partnership Agreement (CEPA), signed in December 2025, grants duty-free access to more than 98% of Indian exports, building on the success of the UAE CEPA, which has already lifted bilateral trade to more than USD 100 billion. The broader India-Gulf Cooperation Council (GCC) FTA has also been revived after years of dormancy, promising to bring India closer to Saudi Arabia, Qatar, and other Gulf economies. These agreements go beyond goods as they streamline logistics, services, and investment flows, embedding India in the commercial heart of the Middle East. For a country that sources nearly two-thirds of its crude oil from the region, such integration is both an economic strategy and geopolitical insurance.

In Africa, the approach is quieter but purposeful. India's 2021 Comprehensive Economic Cooperation and Partnership Agreement (CECPA) with Mauritius remains its only African FTA so far, but the network of development partnerships, lines of credit, and the expanding India-Africa Forum Summit process all point toward eventual trade liberalisation with African partners. India's support for the African Continental Free Trade Area (AfCFTA) aligns with its broader aim of positioning itself as a partner in the Global South's growth story-one that connects investment, capacity-building, and trade in a single framework.

India is also widening its trade map beyond Europe and Asia by deepening engagement across the Americas and Eurasia. In Latin America, the India-Chile CEPA, talks which was launched in 2025, aim to upgrade an older preferential pact into a fuller agreement spanning critical minerals, agriculture, and services, while India and MERCOSUR (South America's main trade bloc led by Brazil and Argentina, alongside Paraguay and Uruguay) have agreed in principle to modernise their trade framework to expand tariff coverage and improve regulatory cooperation; meanwhile, Canada remains a stalled track after political tensions, but could reopen if ties stabilise. In parallel, India is pursuing more geopolitically sensitive economic corridors: it has agreed Terms of Reference for an FTA with the Russia-led EAEU (with trade around USD 69 billion, primarily driven by oil and fertilizers), seeking predictability and diversification despite Western sanctions, and it has also revived FTA talks with Israel to advance a long-pending pact focused on technology, innovation, and agriculture.

Finally, India's expanding deal pipeline ultimately signals a shift from trade as tariff bargaining to trade as statecraft, a way to lock in markets, standards compatibility, investment confidence, and supply security in a world where economic interdependence is increasingly weaponised. The real test is no longer whether India can sign agreements, but whether it can convert them into competitiveness by aligning domestic regulation with export ambition, building the logistics and compliance capacity to actually use preferential access, and sequencing reforms so that vulnerable sectors adjust without derailing political consensus. If New Delhi manages that implementation challenge while staying agile amid sanctions regimes, carbon border measures, and technology controls, its diversified trade portfolio can serve as a resilience architecture, reducing single-market exposure, strengthening bargaining power, and positioning India as a credible hub in the next generation of global value chains.

(The author is Fellow & Lead, World Economies and Sustainability, CNED)

Disclaimer: These are the personal opinions of the author