India’s new mega free trade agreement with the European Union is more than just a commercial breakthrough; it is a strategic moment that underlines the arrival of a genuinely multipolar world order. At its core, the pact ties together two of the world’s largest economic blocs, but its real significance lies in the political message it sends and the future architecture of global trade and security it begins to shape.
Not Just Trade: A Multipolar Signal
The agreement creates one of the world’s largest economic partnerships, covering a combined market of roughly 2 billion people and nearly a quarter of global GDP. For India, it plugs the last major gap in Prime Minister Narendra Modi’s long-articulated vision of a multipolar world in which New Delhi is not aligned behind any single power centre but works with all major poles on its own terms.
India already had deep relationships with the United States, Russia, key Asian partners such as Japan and ASEAN, and Indo-Pacific players like Australia and Canada. The EU, however, remained the missing piece in this strategic jigsaw, despite being a nearly 19–20 trillion dollar economy. With this deal, that gap has been decisively bridged, sending a message that India now has real options and will not be swayed by external pressure or “brow beating.”
The India–EU is not confined to tariffs and market access; it also includes defence, security and a forward-looking strategic agenda. This breadth makes it a template for how large democracies can cooperate in a fragmented global order.
What the Deal Actually Does
The free trade agreement is the first of three pillars announced: a trade deal, a defence and security pact, and a comprehensive strategic agenda for the future. The FTA itself is expected to be formally initialled around January 2027, after the English text is translated into 22 EU languages, vetted by all member states and ratified by the European Parliament.
Today, India–EU trade stands at about 130 billion dollars. Within one to one-and-a-half years of the deal coming into force, that figure could rise to around 300 billion dollars, with some projections suggesting it may even reach 500 billion dollars by the end of this decade. Once the agreement is implemented, up to 90% of Indian exports to the EU are expected to enter on zero duty, dramatically improving India’s position in a highly lucrative and mature consumption-driven market.
Equally important is the levelling of the playing field in India’s neighbourhood. Countries such as Pakistan, Bangladesh and Sri Lanka have long benefited from special preferential access to the EU under GSP+ schemes. After this deal, India too will export at zero duty, neutralising that advantage and opening the door to a more balanced regional competition.
The structure of trade also works in India’s favour. Europe specialises in high-tech engineering, while India is strong in second-level engineering, textiles, leather, garments, gems and jewellery. These baskets are largely complementary rather than competing, which means the agreement is designed to expand volumes rather than trigger a ruinous race to the bottom.
Defence and Security: A Second Pillar
The second major component is the India–EU defence and security partnership, operating in three broad phases.
First, European defence majors are now positioned to partner directly with India’s private sector, without being throttled by bureaucratic hurdles. This opens the way for joint ventures that could design and build military platforms in India under a genuine “Make in India” framework, taking advantage of European technology and Indian manufacturing capacity.
Second, cyber security cooperation will be a central plank. Europe has a highly developed cyber industry, and cyber resilience is increasingly the first line of defence in any period of hostility. A deeper cyber partnership will help India plug into advanced capabilities while giving European firms access to one of the world’s most dynamic digital markets.
Third, maritime security—especially in the Indo-Pacific—will gain new momentum. With India’s relationship with the United States going through a turbulent phase, European navies and policy frameworks can play a bigger role in shaping an open, rules-based maritime architecture from the Indian Ocean to the western Pacific. Space cooperation and joint projects such as Eurodrone-like platforms could also move from concept to reality once trust and industrial linkages deepen.
The Agenda for the Future
The third pillar, a comprehensive strategic agenda, is about how India and the EU will take this partnership forward over the coming decade. Once a major trade deal is signed, trust between the two sides inevitably rises; that trust is the foundation for cooperation in sensitive domains like high-end technology, dual-use systems and critical supply chains.
Supply chains are expected to “plug into” each other in both directions. If it is cheaper to make an automobile or auto part in India, European automakers will do it here; if a component requires cutting-edge technology, India will import it from Europe. Indian investment already exists in some European auto firms, and this deal should accelerate that two-way movement of capital and technology.
Crucially, the agreement includes a mobility component that can support labour-intensive growth. As trade volumes rise, so will demand for skilled and semi-skilled workers, boosting jobs in sectors such as textiles, leather, engineering goods and services. For young Indians, the EU market could become a far more accessible destination, both for trade-related employment and for specialised high-tech roles.
Modi’s Multipolar Vision and the “Biggest Deal”
This is the biggest trade deal Europe has signed with any single country. A previous EU agreement with Mercosur nations remains stuck in the European Court of Justice, underlining how unusual it is for a pact of this scale to reach the finish line.
The journey has been long. Talks began in 2007, went through 10 rounds and then collapsed in 2013 over Indian reluctance to open up sectors like automobiles, auto parts and wines. After Narendra Modi came to power, reviving and completing the EU deal became a top priority, with outreach attempts in 2015 and 2017 initially rebuffed by a sceptical Brussels.
From 2021 onwards, under a revamped trade and investment dialogue, India signalled a willingness to change and tabled concrete proposals. After another 10 intense rounds of negotiations—driven by Commerce Minister Piyush Goyal, External Affairs Minister S. Jaishankar, the Commerce Ministry, the Ministry of External Affairs, the PMO and the wider “Team Modi”—the agreement was finally clinched.
For Modi, the stakes are much larger than commerce. Bringing the EU firmly into India’s network of strategic partners completes his multipolar map: strong ties with Washington and Moscow, an entrenched role in Asia and the Indo-Pacific, and now a deep economic and security partnership with Europe. The message to the world is that India will engage widely, hedge wisely, and build
This deal is a genuine game changer: it boosts trade, creates jobs, drives technology transfer, strengthens defence cooperation and enhances India’s leverage across multiple theatres. Most of all, it underlines that India is no longer a rule-taker in the global order, but a rule-shaping power at the heart of an emerging multipolar world.
About the Author
