Trade wars and geopolitical tensions are shaping the EU-India summit in New Delhi. A planned mega-agreement aims to bundle economic strength and bring the world's two largest democracies closer together. A study forecasts significant GDP boosts for both sides.
The EU-India summit in New Delhi is taking place amid global uncertainties, including trade wars and geopolitical tensions. Negotiations aim for a comprehensive free trade agreement to strengthen the economic potentials of the world's two largest democracies.
An exclusive study by the Kiel Institute for the World Economy, available to Handelsblatt, calculates significant benefits. The European Union's gross domestic product (GDP) could permanently rise by 0.12 to 0.13 percent annually, equating to about 22 billion euros in additional economic output. For India, growth of around four billion dollars is projected. Indian exports to the EU are expected to increase by 41 percent, while EU exports to India would rise by 65 percent.
These effects are not short-term but lead to steady growth through increased investments. "The benefits persist because the free trade agreement fundamentally changes the cost structure of trade between the EU and India through multiple channels," explain economists Julian Hinz, Rolf Langhammer, Hendrik Mahlkow, and Vasundhara Thakur.
The agreement is set to be finalized on Tuesday and gains relevance amid looming Trump tariffs. It promises opportunities particularly for the automotive and chemical industries.
