The EU–India Trade Deal: Strategic Diversification in an Era of Uncertainty

• The EU–India FTA generates mutual economic gains of 0.12–0.13% of GDP for both partners, with bilateral trade surging by 41–65%.

• Since the 50 percentage points tariffs imposed by the US cost India 1.6% of GDP, the EUIndia FTA provides a crucial hedge while the EU demonstrates commitment to open trade amid global protectionism.

• The EU-India FTA results in a substantial trade diversion from China (an estimated 5–9%), supporting both EU de-risking objectives and India’s supply chain diversification strategy.

• The FTA’s structural benefits persist regardless of US policy changes making this trade deal a long-term partnership, not a temporary hedge.

Kiel Institute Experts