The EU-India trade deal: Strategic diversification in an era of uncertainty

Julian Hinz, Rolf J. Langhammer, Hendrik Mahlkow and Vasundhara Thakur

No 202, Kiel Policy Briefs from Kiel Institute for the World Economy

Abstract: • 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 EU-India 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.

Keywords: EU-India FTA; Trade Policy; Tariffs; Supply Chain Diversification; De-risking; Freihandelsabkommen EU-Indien; Handelspolitik; Zölle; Diversifizierung der Lieferkette; Risikominimierung (search for similar items in EconPapers)
Date: 2026
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