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    COVER STORY                                                        FEBRUARY 06, 2026       |  The Indian Eye                    4

                                                            INDIA-EU FTA

                              BIG BOLD

                                                MOVE

               The India–EU Free Trade Agreement marks a decisive shift in India’s economic diplomacy—opening new
                 growth pathways at home while unsettling Washington and recalibrating the geopolitical chessboard

                                                         involving the US, China and Russia.

            OUR BUREAU                                                                                            irbhar India.” This framing is politi-
                                                                                                                  cally and economically deliberate. By
            New Delhi                                                                                             linking the FTA to jobs, skills, start-
            T     he conclusion of the long-ne-                                                                   ups and youth opportunity, the gov-

                  gotiated
                                                                                                                  ernment is countering the tradition-
                              India–European
                  Union Free Trade Agreement
            (FTA) is being hailed in New Delhi as                                                                 al criticism that free trade primarily
                                                                                                                  benefits large corporations. The em-
            a watershed in India’s global econom-                                                                 phasis on  manufacturing  capability,
            ic engagement. Described by both                                                                      localization, and technology transfer
            sides as the “mother of all deals,” the                                                               allows New Delhi to argue that open-
            agreement comes at a moment when                                                                      ness and self-reliance are no longer
            the global trading system is fractured                                                                contradictions but complementary
            by protectionism, strategic rivalry and                                                               strategies.
            war-driven realignments. For India,                                                                       The Indian economy stands to
            the FTA is not merely a trade pact;                                                                   gain in several tangible ways. In au-
            it is a strategic statement about eco-                                                                tomobiles, the gradual reduction of
            nomic  confidence,  geopolitical  au-                                                                 import duties—while politically sen-
            tonomy and the country’s ambition                                                                     sitive—could catalyze  innovation,
            to position itself as a central pillar                                                                push domestic manufacturers up the
            of the global economy. Yet the deal                                                                   value chain, and integrate India more
            has also triggered unease in Washing-                                                                 deeply into global automotive supply
            ton, highlighted fault lines within the                                                               networks. In aerospace and defense,
            Western alliance, and intersected un-                                                                 structured collaboration with Euro-
            easily with India’s still-pending trade                                                               pean  firms  could  accelerate  the  in-
            negotiations with the United States.                                                                  digenization of critical technologies,
                At its core, the India–EU FTA                                                                     a long-standing strategic goal. In IT
            reflects  India’s  evolving  economic                                                                 and professional services, mobility
            trajectory.  With  growth  projected                                                                  frameworks and social security coor-
            to remain among the highest glob-  Prime Minister Narendra Modi, with President of the European Council António Luís Santos   dination promise to ease long-stand-
            ally, India is increasingly viewed as                                                                 ing frictions faced by Indian profes-
            both a manufacturing hub and a vast   da Costa, and President of the European Commission Ursula von der Leyen, during the sign-  sionals in Europe, especially as AI
            consumer market. The EY report     ing of India-EU FTA at Hyderabad House, in New Delhi on Tuesday. (ANI Photo/Rahul Singh)  and digital services reshape global
            describing the agreement  as one  of                                                                  labor markets.
            the most forward-looking concession   The scale of the agreement is   automobiles and aerospace open a    Yet  the  FTA’s  significance  goes
            packages India has ever negotiat-  significant. Covering nearly a quarter   market long seen as difficult to pen-  well beyond sectoral gains. Strategi-
            ed underscores how far New Delhi   of global GDP and more than a fifth   etrate. For both, defense and tech-  cally, it reflects India’s determination
            has moved from the inward-look-   of the world’s population, the India–  nology collaboration offer pathways   to diversify economic partnerships at
            ing trade posture of the past. Tariff   EU FTA links two economic giants   beyond transactional trade into stra-  a time when overdependence on any
            liberalization across automobiles,   with complementary strengths. For   tegic industrial partnerships.  single bloc is seen as risky. The Euro-
            textiles,  pharmaceuticals,  defense,   India, zero-duty  access to  the EU   Prime Minister Narendra Modi   pean Union, for its part, is seeking to
            aerospace and services signals India’s   market  for textiles  from  Day One   has framed the agreement in charac-  reduce its reliance on China and, in-
            willingness to integrate more deeply   restores competitiveness lost after   teristically aspirational terms—“Free   creasingly, on the United States amid
            with global value chains—on its own   the withdrawal of GSP benefits. For   Trade for Ambitious India, for As-  growing transatlantic trade tensions.
            terms.                            Europe, phased tariff reductions in   pirational Youth, and for Aatman-    Continued on next page... >>

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