‘Trade Deals With US & EU Will Integrate India Into Global Economic Order’
Dr Rishi Vivek, faculty, Economics at ANM PG College in Balia (UP), says India has played its cards well to strategically de-escalate trade tensions with major partners. His views:
Both the United States and the European Union are among India’s largest trading partners, yet the nature of engagement, sectoral composition, policy frameworks, and long-term implications differ significantly. To give a brief insight, while the US is a single-country partner, the EU represents a bloc of 27 member states, giving it a unique regulatory and institutional complexity.
India generally enjoys a trade surplus with the US, largely due to strong services exports and pharmaceutical shipments. On the contrary, the trade with the EU is more balanced and though India often runs a moderate surplus in goods, the US relationship is heavily services-driven, whereas India–EU trade remains more goods-oriented.
However, India and the US do not have a Free Trade Agreement (FTA) and therefore disputes are managed through dialogue mechanisms such as the Trade Policy Forum. There have been disagreements over tariffs, digital taxes, intellectual property rights, and visa policies. The absence of a comprehensive trade agreement commands that trade expansion is shaped more by market forces than by formal tariff reductions. In contrast, India and the EU are negotiating a comprehensive Free Trade Agreement, along with investment protection and geographical indications agreements.
Talking about the salient features of the India-US deal, the details of which have started surfacing reliably, it is a major strategic de-escalation of trade tensions through reciprocal tariff and energy shifts. The primary component of the deal includes tariff reductions, energy shift, market access and procurement, selective liberalization, and strategic alignment.
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In addition, the India-EU Free Trade Agreement, which was dubbed as the “mother of all deals,” is a landmark pact that removes tariffs on over 96% of EU imports into India and over 99% of Indian exports to the EU. The crux lies in reciprocal access: India gains duty-free access for labor-intensive goods (textiles, leather, marine), while the EU gains access for automobiles, wines, and machinery.
The key aspects include massive tariff reduction, immediate zero-duty access to key sectors like textiles, apparel, leather, marine products, gems, jewellery and toys, drastic cuts to high tariffs on key sectors of the EU, services and labour mobility, strategic shifts and sustainability and compliance.
While the India-EU trade, especially after the FTA, could transform manufacturing, green industries and regulatory frameworks, the India-EU trade is regulatory-intensive, sustainability-focused, and manufacturing-oriented. Both partnerships are complementary rather than competitive.
For India’s long-term economic growth, balancing these two relationships is crucial. The US supports India’s digital and strategic ambitions, while the EU strengthens industrial capacity and environmental standards. Together, they anchor India’s integration into the global economic system and enhance its standing as a major power in the 21st century.
Regarding numerous allegations floating on various platforms, I would advise caution that people must not fall prey to misinformation and interpret wisely after thoroughly going through both the deals in black & white. We must rely only on authentic source of information such as traditional mainstream media like established newspapers and magazines; and not popular sources of information like digital platforms, dubious websites, messaging apps and, sometimes, even select noisy news channels.
As told to Rajat Rai
