India-EU FTA: The free trade deal between India and the European Union is not just trade but a global power move. This partnership, which connects about 25% of the world’s GDP, may loosen America’s ‘rule-maker’ grip and may also cause a major blow to China.
India-EU Deal US China Tension: The India-European Union (EU) free trade deal, which was stuck for 18 years, has finally been signed. On the surface it appears to be a trade agreement, but in reality it is a move that will shake the power politics of the world. Because India and EU together handle about 25% of global GDP and about one-third of total world trade. This is the reason why this deal not only changes business, but is also going to make both America and China uneasy, especially when Donald Trump’s tariff action is going on.
India-EU deal is not trade, it is power move
India is the fourth largest economy in the world and EU is the second largest economy. The coming together of these two gives a clear message that now global trade is not going to revolve only around America-China. This deal is creating a new economic axis (New Power Axis), in which India is at the center.
Why is America worried?
According to experts, till now America’s role was that of rule maker, but after the India-EU deal, Europe’s inclination has increased towards India in Asia. This could weaken America’s hold on technology, rare minerals and supply chains. Since India has now emerged as a strategic partner and not just a market, it is a soft power loss for America.
Why might China feel more pain?
Experts say that China’s real concern is that such a deal can reduce EU’s dependence on China and India is going to get the biggest benefit of ‘China + 1 Strategy’, meaning manufacturing and supply chain can shift towards India.
How will the game of global supply chain change?
Regarding this deal, Prime Minister Narendra Modi said that ‘trade and technology are being weaponized in the world.’ The objective of the India-EU deal is to secure the supply chain, reduce dependence on any one country, and increase partnership in tech, energy and rare minerals. This is why this agreement is not just a trade but also a future security strategy.
Where will India get the real benefit?
India will get a boost of $33 billion in exports from this deal. Sectors like textiles, leather, jewellery, fish will benefit. IT and professional services will get a bigger market in EU and digital payments and online services will get a boost. That means India will not only sell goods, it will also export services and technology.
Why were farmers given special care?
In this deal, India has kept things like milk, grains, fruits and vegetables out of FTA. Experts say that the reason for this is clear so that farmers do not suffer losses due to cheap European products. That means this deal is not an ‘open market’ but a balanced strategy.
What message did you send to the world?
EU chief Ursula von der Leyen said, ‘This deal proves that the answer to today’s challenges is cooperation, not isolation.’ It clearly means that India is now not just an emerging economy but is becoming a global decision-maker.
Now what is the further plan?
India and European Union aim to double India-EU trade by 2032. Experts believe that if this happens, the direction of global trade will change. The US-China monopoly will weaken and India will emerge as a new economic superpower.