Jan 30 – The global order is undergoing a profound rupture. The rule-based international system that major powers have long claimed to uphold appears to be fraying, if not collapsing altogether. This transition has been widely noted in recent months by global leaders and analysts.
Speaking at the World Economic Forum in Davos, Canadian Prime Minister Mark Carney openly acknowledged the scale of the shift. The warning was echoed by French President Emmanuel Macron, who cautioned against the emergence of a “world without rules”, where international law is routinely trampled and power alone dictates outcomes.
The present global climate increasingly mirrors the ancient Indian concept of Matsya Nyaya—the law of the fish, where the big devours the small. A more modern parallel can be found in George Orwell’s Animal Farm, where “all are equal, but some are more equal than others”. This dynamic has been visible in recent transatlantic tensions, including pressure exerted by the United States on Europe over the Greenland issue and repeated threats of punitive tariffs. These frictions have contributed to European lawmakers stalling approval of a proposed EU–US trade agreement, while tariff disputes have raised export costs and reduced demand for European goods.
At the same time, Europe is grappling with rising imports from China, which have significantly widened the EU’s bilateral trade deficit. The influx of low-cost Chinese goods has weighed on key macroeconomic indicators, including employment, domestic production and trade balance. As domestic demand in China weakens, excess industrial capacity has increasingly been directed outward, intensifying competition in European markets and straining the EU’s productivity and supply-chain resilience.
Trade frictions have escalated further. In December 2025, China imposed temporary import tariffs of up to 42.7 per cent on selected European dairy products, following the EU’s call for investigations into alleged unfair subsidisation of China’s electric vehicle industry.
Against this backdrop of external shocks and structural weaknesses, many European economies are experiencing a slowdown bordering on stagnation. Growth has remained subdued in the EU’s major economies, with Germany, Italy and France recording weak expansion. Thousands of German firms filed for insolvency over the past year, underscoring the strain on Europe’s industrial base. Persistent trade tensions with both the US and China, coupled with competitiveness challenges, continue to dampen economic momentum.
As pressures mount, policymakers and analysts argue that Europe must urgently diversify its economic partnerships. While the EU has sought closer engagement with emerging growth centres, such diversification must rest on trust, equality, rules-based engagement and geopolitical risk mitigation. In this context, India has emerged as a compelling partner, buoyed by strong economic growth and expanding markets amid a largely recessionary global environment. Unlike one-sided trade relationships, India offers the prospect of more balanced, two-way economic engagement.
This outlook was underscored by European Commission President Ursula von der Leyen in a special address at Davos, where she described the ongoing India–EU trade negotiations as potentially “the mother of all deals”. The proposed agreement would create a combined market of nearly two billion people, accounting for close to a quarter of global GDP, while offering Europe a first-mover advantage in one of the world’s fastest-growing regions.
India and the European Union are currently negotiating a Free Trade Agreement formally known as the Trade and Economic Partnership Agreement (TEPA). Amid the shifting international order, the talks present an opportunity to deepen trade and investment ties, expand market access on both sides, reduce non-tariff barriers and strengthen supply-chain resilience. The agreement is also expected to support sustainable development commitments and provide a more predictable environment for investors.
Beyond trade, broader connectivity initiatives could further anchor the partnership. The proposed India–Middle East–Europe Economic Corridor is envisioned as a network of strategic routes linking multiple economic hubs, potentially benefiting both coastal and landlocked EU member states by integrating them into diversified commercial flows.
India has already concluded free trade agreements with several European non-EU states under the European Free Trade Association and with the United Kingdom. Bilaterally, cooperation with Germany has expanded across areas including semiconductors, hydrogen, renewable energy and critical minerals, alongside the establishment of a joint centre of excellence for technology and innovation. On the digital front, India and the EU are deepening collaboration through the Trade and Technology Council, with a focus on resilient supply chains, human-centric artificial intelligence and digital public infrastructure.
Security cooperation is also advancing. This week, India and the EU agreed to sign a new Security and Defence Partnership covering maritime security, cybersecurity and counterterrorism. The move reflects growing recognition of India’s role in Europe’s economic resilience and highlights opportunities for joint efforts to safeguard open sea lanes and resist coercion.
Taken together, these developments illustrate how New Delhi and Brussels are seeking to move beyond transactional ties towards a more durable strategic partnership. In a world marked by rapid geopolitical change, closer alignment between the two offers a pathway to reinforce economic resilience, uphold rules-based engagement and counter destabilising power imbalances. As the international order continues to fragment, shared interests in stability, prosperity and multipolar cooperation are likely to shape the next phase of India–EU relations.
