“Free trade agreement between the EU and India sends a signal against protectionism”

The European Union and India have agreed on a free trade agreement. Sonali Chowdhry, trade expert at DIW Berlin, comments on the significance of this agreement:

The free trade agreement between the European Union and India is incredibly significant. The bilateral partnership is gaining much-needed momentum, after a long negotiation process which began in 2007 and repeatedly stalled. India is expected to grow by 7.3 percent in 2026 and become one of the world's three largest economies in the coming years. The EU can hardly afford not to expand its presence in this market.  

The agreement builds on bilateral trade relations between the EU and India, which already encompasses more than 170,000 buyer-supplier relationships between EU and Indian companies. By reducing tariffs and other trade barriers in key industries, the agreement opens up new opportunities for EU exporters in many sectors such as automotives, machinery, and beverages. At the same time, market access for Indian exports such as pharmaceuticals, IT services, and textiles will improve.  

Beyond these immediate economic benefits, the agreement fulfils another important function that should not be underestimated: it is an insurance policy in the current uncertain situation. This is because the commitments made under free trade agreements provide the transparency and predictability in international trade and global governance that are being undermined elsewhere. Such free trade agreements protect and prevent the global trading system from sliding into a spiral of protectionism.