Twenty years of negotiations. One summit in New Delhi. And a deal that tells you more about the state of the world than about trade.
It took two decades and a trade war to get here
Talks between the EU and India began in 2007, stalled in 2013 and only restarted in 2022. The original breakdown was familiar: Indian tariffs on European cars, EU demands on intellectual property, and data‑localisation rules New Delhi had no intention of changing. For most of the decade, the deal survived mainly as a summit talking point.
What shifted was not the economics but the geopolitics. By early 2026, both sides were exposed to US tariff policy, and Brussels was reassessing its dependence on China. The Hyderabad House summit on 27 January — with von der Leyen and Costa attending India’s Republic Day the day before — was designed to signal that alignment. Von der Leyen called it “the mother of all trade deals,” a phrase that reflects the political moment more than the text itself.
Trade specialists have been more cautious, noting that the agreement focuses on non‑sensitive sectors and reflects urgency as much as ambition. That caveat matters, but it doesn’t diminish the significance of the shift.
What geopolitics moved that economics couldn’t
Washington’s handling of the India-Pakistan skirmishes in April-May 2025 left New Delhi openly disappointed. India had long resisted any third-party involvement in its disputes with Pakistan. The Modi administration was particularly wary of the US appearing to re‑hyphenate India and Pakistan — treating them as equivalent actors. This concern came after two and a half decades of careful differentiation.
Meanwhile, US tariffs on Indian goods — reaching 50% by late 2025 — were concentrating minds in New Delhi about the cost of over-reliance on any single partner. For the EU, the calculation ran the other way: reduce exposure to China, find manufacturing alternatives, secure a foothold in the world’s most populous market before competitors do.
Neither side was acting out of newfound affection. Both were managing risk. That is, in fact, a more durable basis for a partnership than ideology.
India does not choose sides — by design
Jaishankar captured India’s foreign‑policy logic clearly in The India Way: India would “engage America, manage China, cultivate Europe, reassure Russia, bring Japan into play.” It was not a checklist but a doctrine — each verb signalling a calibrated relationship rather than a fixed alignment.
That approach was visible in late 2025 and early 2026. In December, Putin arrived in New Delhi for the 23rd India‑Russia Annual Summit. Both sides announced a “quantum jump” in trade, defence and technology cooperation. Weeks later, von der Leyen and Costa sat in the Republic Day stands as chief guests.
India saw no contradiction in hosting both. Brussels found the sequence awkward, but accepted it — a reminder that Europe needs India at a moment when its strategic room for manoeuvre is narrowing.
As Jaishankar told an audience in Brussels in summer 2025: “The idea that one part of the world will set standards for everybody else is something we are against.” That line was aimed at the EU’s habit of treating its regulatory framework as a universal baseline. It was also a signal about how India intends to operate within any partnership it signs. It plans to act as a rule‑shaper, not a rule‑taker. As examined in our earlier analysis of Europe’s development finance approach toward the Global South, this friction between EU normative ambition and partner-country sovereignty is a recurring structural tension — not one the FTA resolves.
The deal is signed. The hard part begins.
The full FTA text was released in late February 2026. Before it can take effect, it needs approval from the Council of the EU, consent from the European Parliament, and India’s domestic ratification — a step analysts expect to be straightforward. The uncertainty lies in Europe.
Recent history explains why. The EU‑Mercosur deal, politically concluded in 2024, has been sent to the European Court of Justice over environmental concerns, delaying implementation for up to two years. CETA, signed in 2016, still has not fully entered into force. The India agreement avoids some of those pitfalls by being structured as an EU‑exclusive competence rather than a mixed agreement, but that does not remove political risk inside the Parliament.
What Europe is actually buying
The EU is already India’s largest trading partner, accounting for €120 billion in goods trade in 2024. The Commission’s own projections suggest EU exports to India could double by 2032. Tariffs on close to 97% of EU goods exports will be eliminated or reduced under the deal. For European manufacturers — particularly in automotive, machinery, and pharmaceuticals — India’s market has been largely closed. That changes.
But the deal comes with structural frictions attached. EU sustainability frameworks, including the Carbon Border Adjustment Mechanism and the EU Deforestation Regulation, are expected to weigh on Indian export competitiveness. The impact will be particularly strong for steel, aluminium and agricultural goods. India accepted these conditions while signalling it will push back on implementation timelines. The gap between what is agreed on paper and what is delivered operationally is where most trade deals go quiet. This one will be no different.
Beyond goods, the summit also produced a Security and Defence Partnership covering maritime security, counterterrorism, and cyberdefence — and a mobility agreement expanding legal pathways for Indian students and skilled workers into the EU. Together, these agreements represent the most substantive expansion of EU-India ties since the strategic partnership was established in 2004.
Reciprocity, not alignment
Europe did not gain an ally in New Delhi. It gained a partner that acts on its own terms, maintains its own relationships — including with Moscow — and intends to extract maximum strategic and commercial value without offering ideological alignment in return.
Jaishankar has been explicit about this. Partnerships, he argues, should expand India’s options, not narrow them. That is India’s definition of strategic autonomy, and it is not a problem to be negotiated away. It is the basis of engagement.
For Brussels, the shift is less about accepting India’s foreign‑policy choices and more about dropping the idea that economic ties drive normative convergence. EU analysts now argue for a “modular, pragmatic and resilient” framework instead of expecting India to align with European standards.
In the current global environment, a partner with its own agenda — and the leverage to pursue it — may be exactly what both sides need. The question is whether Europe can sustain that kind of relationship without trying to reshape it.
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