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China Out, America Gets a “Double Blow”!
India and the EU are close to finalising the world’s biggest trade deal, reshaping global trade dynamics and challenging US tariffs, H-1B policies, and China’s dominance.
H-1B Visa (PC- Social Media)
A historic turning point is about to unfold in relations between India and the European Union (EU). Both sides have reached the final stage of negotiations to conclude the world’s largest Free Trade Agreement (FTA). According to the latest reports, India’s Minister of Commerce and Industry, Piyush Goyal, recently visited Brussels, where high-level meetings were held with European Union trade ministers. The remaining issues of the trade deal were discussed in depth, and it is now clear that negotiations have entered their final phase. If this agreement is signed, its impact will not be limited to India and Europe alone; it could also deliver a major setback to the United States — particularly to policies associated with Donald Trump.
Talks Reach a Decisive Phase After 15 Years
Negotiations for a Free Trade Agreement between India and the EU first began in 2007, but due to the geopolitical conditions prevailing at the time, the process came to a complete halt in 2013. Talks were revived in June 2022, and after nearly three years of long and complex negotiations, the agreement now appears to be very close to completion. Given current global conditions — especially U.S. tariffs, visa restrictions, and rising strategic challenges from China — this deal has become even more crucial.
Trump’s Tariffs and H-1B Visa Policies Become Key Triggers
During Donald Trump’s tenure, the U.S. “America First” policy severely disrupted global trade. Heavy tariffs and strict immigration rules, particularly restrictions on H-1B visas, caused significant losses for both India and Europe. Indian IT and technology professionals were directly affected, while European companies faced uncertainty in the U.S. market. In this context, the India–EU trade deal is being viewed as a strong alternative to reduce dependence on the United States.
The China Factor Brings India and Europe Closer
According to reports, the biggest strategic reason behind this deal is China. Over the past few years, China has tightened control over the supply of rare earth minerals and has restricted their export to several European countries. This has had a direct impact on Europe’s largest manufacturing sector — the automobile industry — creating even the risk of factory shutdowns.
In this context, the European Union’s Critical Raw Materials Act (CRMA) has identified India as a key partner for raw material supply. India’s state-owned company, Indian Rare Earths Limited (IREL), produces approximately 1,300 to 1,500 tonnes of neodymium oxide annually — a material essential for electric vehicles and high-tech industries. A trade deal with India could significantly reduce the EU’s dependence on China.
Europe Needs a New Market, India Gets a New Opportunity
Europe is currently facing a decline in retail sales and slow economic growth in China. As a result, demand for European products has fallen by more than 25 percent. In such a scenario, India — with its rapidly growing economy — is emerging as a major alternative market for Europe.
For India, too, this deal could prove historic. India already enjoys strong relations with two of Europe’s largest economies, France and Germany. Around 600 European companies are already operating in India, opening new avenues for investment and technological collaboration.
Major Relief for Indian Professionals
Amid uncertainty surrounding H-1B visas in the United States, if European countries open their doors to Indian professionals, it would represent a major strategic victory for India. In particular, STEM professionals (Science, Technology, Engineering, and Mathematics) could find new opportunities across Europe. This would reduce dependence on the U.S. and strengthen India’s position in the global talent movement.
How Much Will India Gain from the FTA?
According to a Forbes report, a Free Trade Agreement with the EU could bring India significant benefits in both the short and long term.
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In the short term, India’s real income is expected to increase by approximately USD 3.5 to 5.16 billion.
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India will gain substantially in services exports. After implementation of the FTA, Indian services exports to the EU could rise by nearly 20 percent, while the EU’s increase is expected to be around 1 percent.
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In the automobile sector, exports of European cars could increase by about 50 percent, as India may reduce import duties exceeding 60 percent on fully assembled European vehicles.
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Labour-intensive sectors such as garments, textiles, gems, and jewellery are also expected to benefit significantly, as they already have a strong presence in Europe.
What Do Trade Figures Say?
Over the past decade, trade in goods between India and the EU has grown by nearly 90 percent. In 2024, the EU was India’s second-largest trading partner, with bilateral trade amounting to USD 140 billion — accounting for 11.5 percent of India’s total trade. India, in turn, is the EU’s ninth-largest trading partner, representing 2.4 percent of the EU’s total trade.
Modi’s Message and the Road Ahead
During talks held in New Delhi in February 2025, Prime Minister Narendra Modi stated that important decisions had been taken to make the India–EU partnership “better and faster,” rooted in a “shared trust in democratic values.” If this deal is signed, it will not only elevate economic relations between India and Europe to new heights but will also send a strong message to both the United States and China.
This is precisely why it is being described as a “double blow” for Donald Trump — on one hand, the strengthening of India–EU trade ties, and on the other, America’s declining influence over global talent flows and supply chains.
