India has moved to deepen its economic ties with both the European Union and the United States, advancing two significant but structurally different trade arrangements within weeks of each other. While both initiatives signal New Delhi’s intention to expand global trade partnerships, the agreements differ in ambition, scope and political context.
Great news for India and USA!
We have agreed on a framework for an Interim Trade Agreement between our two great nations. I thank President Trump for his personal commitment to robust ties between our countries.
This framework reflects the growing depth, trust and dynamism of… https://t.co/zs1ZLzamhd
— Narendra Modi (@narendramodi) February 7, 2026
The EU–India agreement, concluded after nearly two decades of intermittent negotiations, represents a comprehensive free trade deal. Talks between Brussels and New Delhi were first launched in 2007 but stalled repeatedly over market access, regulatory standards and protection of sensitive sectors. Their eventual conclusion has been described by European policymakers as a milestone in the bloc’s push to diversify trade relations amid shifting global dynamics.
Under the agreement, tariffs on the vast majority of goods traded between the two sides will be reduced or eliminated over a phased transition period. European exporters are expected to gain improved access to India’s large and fast-growing consumer market, particularly in industrial goods such as machinery, chemicals and automobiles. For India, the deal opens further access to the EU market for sectors including textiles, apparel and leather goods. The agreement also addresses customs procedures, intellectual property rules and elements of services trade, reflecting its comprehensive nature.
Yet tariffs are only part of the trade equation. For many of the EU’s partners, regulatory requirements have become an equally significant factor in market access. In recent years, Brussels has introduced a series of measures framed around environmental protection, most notably its deforestation regulation. The rules require exporters of products such as cocoa, coffee, soy, palm oil and beef to demonstrate that the land used in production has not been subject to deforestation since the end of 2020.
The policy has drawn criticism from several trading partners, including Brazil and the United States, as well as palm oil–exporting countries in Southeast Asia such as Malaysia and Indonesia. These countries argue that the additional compliance requirements create administrative burdens that function as non-tariff barriers.
Critics also question the EU’s approach to recognizing equivalent national standards. Malaysian authorities, for example, point to domestic regulatory improvements and environmental data showing a 13 percent reduction in deforestation in 2024, with primary forest loss reported at 0.56 percent — lower than Sweden’s 0.87 percent, according to Global Forest Watch. The perception that the United States received partial exemptions for certain products has further fueled debate over consistency and fairness in implementation.
Malaysia in particular achieved a significant, sharp reduction in primary forest loss, with rates falling by 65% between 2014 and 2023, marking a shift toward improved forest management, notes an article on the World Economic Forum website. Despite losing roughly Mha of tree cover between 2001 and 2024, the country is increasingly enforcing sustainable practices and aims to maintain over 50% of its land as forest. The mandatory Malaysian Sustainable Palm Oil (MSPO 2022) standard which restrict the conversion of natural forests have reportedly played a major role in the success.
It adds:
“Corporate commitments have also played a role in curbing deforestation in Indonesia, as they have in Malaysia. No Deforestation, No Peat and No Exploitation (NDPE) commitments now cover the majority of the palm oil sector, while the pulp and paper industry – another major deforester – has also seen key pledges made to halt forest loss.”
Trade at a crossroads
Regulatory questions form part of the broader backdrop to the EU’s external trade policy. As recent analysis of Brussels’ trade diversification strategy has noted, the bloc’s efforts to expand its economic partnerships have often been accompanied by complex regulatory demands that some partners view as difficult to navigate. Against that backdrop, securing an agreement with India — now one of the world’s largest and fastest-growing major economies — carries geopolitical as well as commercial weight. The agreement still requires ratification on both sides before it enters into force, a process that could extend into 2027.
In contrast, the U.S.–India arrangement is currently framed as an interim trade framework rather than a finalized free trade agreement. Announced following renewed high-level engagement between Washington and New Delhi, the framework lays the groundwork for a broader bilateral trade agreement that remains under negotiation.
The interim nature of the U.S. deal reflects a more recent and at times turbulent trade relationship. In recent years, tariff disputes and the withdrawal of trade preferences created friction between the two countries. The new framework aims to stabilize those tensions by outlining reciprocal tariff adjustments and enhanced cooperation in areas such as standards alignment and supply chain resilience. However, key details of a comprehensive agreement remain to be negotiated.
The structural differences between the two arrangements are notable. The EU deal is the product of long-term negotiations culminating in a legally defined free trade agreement with wide-ranging commitments. The U.S. framework, by comparison, represents a political and economic reset designed to build momentum toward a future, more detailed accord.
Strategically, India appears to be pursuing parallel tracks. Engagement with the European Union offers predictable access to one of the world’s largest single markets through a rules-based trade framework. Engagement with the United States reinforces ties with a key strategic partner, particularly in sectors linked to technology, manufacturing and supply chains.
Domestic reactions illustrate the balancing act facing policymakers in New Delhi. Some industry groups and agricultural stakeholders have voiced concerns about increased foreign competition under both arrangements, while government officials have emphasized phased implementation and protective measures for sensitive sectors. In Europe, debate has centered not only on economic benefits but also on how regulatory standards intersect with trade policy.
Taken together, the EU–India and U.S.–India trade initiatives underscore India’s growing centrality in global economic diplomacy. Rather than choosing between Brussels and Washington, New Delhi is seeking to expand its commercial footprint with both, leveraging its market size and strategic position. The coming years — particularly the ratification of the EU agreement and the negotiation of a full U.S. bilateral trade pact — will determine how far that strategy translates into tangible economic gains.
🇺🇸🇮🇳 US–India trade deal just rewired oil flows
💰And it’s a tailwind for Exxon + Chevron
This is an energy corridor being formalized.
What just happened?
• The US cut tariffs on Indian goods to 18% from 50%
• ⚠️#Trump rescinded the extra 25% penalty tariff that was tied… pic.twitter.com/hAiBfvf88P
— Jack Prandelli (@jackprandelli) February 7, 2026