India advances in a trade pact with the EU as negotiations with the US drag on: what does this movement reveal about the new global scenario?

Published on 15/01/2026 

In recent weeks, India has intensified negotiations to conclude a broad trade agreement with the European Union, signaling a clear strategic change in how the country seeks to position itself in international trade. The Indian government’s expectation is to finalize the pact later this month, which may represent the largest trade agreement ever signed by New Delhi.  

The advance occurs in a context of increased global protectionism and uncertainties in trade relations with the United States. According to the Indian Trade Secretary, Rajesh Agrawal, the parties are “very close” to a consensus after years of intermittent negotiations. The process gained momentum after the President of the European Commission, Ursula von der Leyen, and the Indian Prime Minister, Narendra Modi, agreed to speed up the negotiations with the aim of concluding the agreement in 2025.  

The economic weight of this possible agreement is significant. Bilateral trade between India and the European Union reached around EUR 120 billion in 2024, consolidating the European bloc as the largest Indian trading partner. In a global environment marked by geopolitical tensions and reconfiguration of productive chains, the pact appears as an alternative to reducing dependence on traditionally dominant markets such as China and Russia.  

The intensification of negotiations also reflects the indirect impact of tariff policies adopted by the United States in recent years. After then president Donald Trump imposed tariff increases on several trading partners, including India, New Delhi began to seek more urgently agreements to ensure stable access to new markets and greater commercial predictability.  

Despite the advance, the agreement preserves important red lines for the Indian economy. Sensitive sectors, such as agriculture and dairy, remained outside the negotiations, with the government reinforcing the need to protect millions of farmers from subsistence. At the same time, the European Union is pushing for tariff reductions in sectors such as cars, medical devices, wines and alcoholic beverages, as well as stricter intellectual property rules.  

India, in turn, seeks tax-free access to labour-intensive products, as well as more agile recognition of its automotive and electronic sectors. The agreement should also go beyond trade in goods, covering services, investments, digital trade, green technologies and intellectual property, with the potential to attract more European capital to manufacturing, renewable energy and Indian infrastructure.  

In the meantime, negotiations with the United States continue without a definite timetable. Second & nbsp;Agrawal, an agreement will be closed only when both parties are ready, after the talks have collapsed last year for failure to communicate between governments.  

If concluded, the pact with the European Union will open a highly protected consumer market with more than 1.4 billion people, and could reshape global trade flows at a time of increasing risk aversion. Still, challenges remain, especially related to regulatory alignment and the carbon adjustment mechanism at the EU border, which is already beginning to impact Indian carbon-intensive exports.  

The advance of the India–EU agreement reflects a changing world, in which countries and blocs seek protection, predictability and efficiency in the midst of economic and geopolitical instability. For the financial market, these movements act as important signs of change in global flows of capital and trade.  

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