Opinion

Why the EU–India FTA matters for Europe’s competitiveness

As the US turns inward and China tightens its grip, Brussels looks to New Delhi for economic survival

January 29, 2026

The trade deal that could reshape global power politics

Is the US getting sidelined in this process?

The EU–India Free Trade Agreement is no longer about commerce alone. It’s about whether Europe remains a first-tier power in a world where the US is turning inward, and China is tightening control.

The global trade chessboard is undergoing a radical redesign, and for the European Union, the long-stalled Free Trade Agreement (FTA) with India is no longer just a bilateral pact—it is a vital organ for Europe’s economic survival. As the “Draghi Report” recently highlighted, Europe is facing an existential competitiveness crisis, squeezed between a protectionist United States and a dominating China. India represents the ultimate “third way.”

The Competitiveness Catalyst

India isn’t just a market; it’s a demographic powerhouse with 1.4 billion consumers and a burgeoning middle class hungry for European high-tech, machinery, and luxury goods. For the EU industry, an FTA offers a release valve for stagnant domestic growth. More importantly, it provides a crucial “De-risking” alternative to China. By integrating with Indian supply chains, Europe can secure its electronics and pharmaceutical pipelines without relying on a single, geopolitical rival.

Sidelining the US?

The provocative question of “sidelining the US” stems from Washington’s recent pivot toward “America First” industrial policy. From the Inflation Reduction Act to aggressive tech export controls, the US is increasingly playing for its own team, often at the expense of European industry. By cementing an FTA with India, the EU is making a move for Strategic Autonomy.

If the EU can lock in preferential access to the world’s fastest-growing major economy before the US does, it creates a “Eurasian Corridor” that bypasses transatlantic gatekeepers. While the US focuses on security-heavy frameworks, the EU can lead with trade-heavy integration. This isn’t about breaking the alliance with Washington; it’s about ensuring Europe isn’t just a “junior customer” in a US-led trade bloc.

The Roadblocks

Of course, “snappy” trade deals are rare. Friction remains over European dairy and automotive tariffs, while India demands easier visa access for its massive IT and engineering talent pool.

The Bottom Line

The EU–India FTA is the missing piece of the European competitiveness puzzle. It offers the scale Europe lacks, the growth the US is hoarding, and the diversification China is threatening. In a world where the US is increasingly inward-looking, Europe’s path to the top of the leaderboard runs directly through New Delhi. Negotiating this deal isn’t just a diplomatic exercise—it’s Europe’s best shot at remaining a first-tier global power.

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