India-EU Trade Deal Sets Strategic Example for Australia, Praised by Think Tank, Critiques U.S. Approach

Canberra/New Delhi: The recent trade agreement between India and the European Union (EU) has drawn global attention, with an Australian think tank calling it a “case study for strategic economic diplomacy.” The Lowy Institute, in a detailed report, highlighted how the deal reshapes global trade flows and offers lessons for countries like Australia.

The study emphasized that the India-EU Free Trade Agreement (FTA) connects two of the world’s largest democratic economies, signaling a shift from old trade certainties. “By linking two major democracies, this deal reconfigures global trade flows while demonstrating how leading economies adapt to an increasingly fragmented and unstable world order,” the report said.

Strategic and Economic Significance
The Lowy Institute noted that the deal is more than just a commercial arrangement. It represents a geopolitical strategy where major democratic economies align themselves in response to a changing global landscape. For India, the FTA helps reduce dependency on any single market. It complements India’s broader trade diplomacy, which has seen agreements with Australia, the UAE, the UK, European Free Trade Association (EFTA) countries, Oman, and New Zealand.

The report also highlighted India’s strong commitments under the EU FTA, particularly in services, finance, and maritime sectors, which exceed those offered to other partners like Australia and the UK.

Lessons for Australia
For regional partners such as Australia, the Lowy Institute described the India-EU FTA as a critical case study in strategic options. The deal offers both competition and opportunities, demonstrating how economic partnerships can be shaped not only by commerce but also by long-term trust and strategic alignment.

According to the think tank, the agreement illustrates India’s ability to forge partnerships that are flexible, rules-based, and responsive to a multipolar global economy. It signals a shift away from rigid alliances toward adaptive, mutually beneficial arrangements.

Implications for the Global Order
The Lowy Institute observed that the India-EU FTA reflects a world where traditional trade assumptions no longer hold. The deal provides a strategic counterbalance to rising protectionism and emphasizes that in a multipolar economy, strategic flexibility may be more valuable than any single currency.

“Silently making history in New Delhi and Brussels, the message is clear: the global order is being redesigned. Those who prioritize partnership over isolation will help define the new rules,” the report concluded.

India and the European Union officially signed the trade agreement on 27 January 2026, marking a milestone in India’s evolving economic and diplomatic strategy.