India is accelerating efforts to finalise free-trade agreements with Britain and the European Union by the end of the year, as it seeks to safeguard its economy against the ripple effects of US President Donald Trump’s latest tariff moves.
Analysts say New Delhi’s move to diversify its trade partnerships reflects a strategic shift to reduce reliance on the US market.
India was expected to adopt a measured approach in its negotiations with the United States, aiming to secure a trade agreement by September, said T.S. Vishwanath, principal adviser at international trade consultancy ASL-Legal.
At the same time, Delhi is working to expand its trade partnerships to cushion against any potential fallout from American policy shifts.
British businesses were informed during a call with negotiators this week that 90 per cent of the UK-India free-trade agreement had already been finalised, The Guardian reported. Remaining issues include tariffs on whisky, cars and pharmaceuticals.
In February, Indian Prime Minister Narendra Modi and European Commission President Ursula von der Leyen met in Delhi, where they expressed a shared determination to finalise the trade agreement. Von der Leyen was accompanied by a delegation of EU leaders, and discussions extended beyond trade to include defence and security partnerships.
“Partially, Trump’s tariffs have created urgency around diversification, encouraging quicker deal-making between global powers,” said Chris Blackburn, an independent UK-based political commentator.
One major sticking point in the India-EU talks is the EU’s planned implementation of a carbon border adjustment mechanism starting next year. This policy would impose charges on carbon-intensive goods, posing challenges for India, which still relies heavily on coal and fossil fuels to meet its energy needs despite making great strides in renewable energy capacity.
Climate experts are hopeful for a compromise, however, noting both sides’ commitments to net-zero goals. They suggest that collaboration could extend into renewable energy and the development of environmentally friendly technologies.
If Washington’s trade policies persist, other key sectors – including aerospace, industrial machinery, pharmaceuticals, luxury goods, and agricultural products such as cheese, wine and olive oil – could face greater exposure to trade uncertainties.
“This pressure is pushing them to diversify,” Blackburn said. “Countries have hedged between East and West for decades. The East could win. It’s a high-stakes gamble by Trump.”