The Indian system at the center of the new geopolitical balance
Covering an area of 3.3 million square kilometers and with a population of over 1.45 billion, India is on its way to becoming the world's fourth largest economy. Growth is supported by strong trade relations with both Western and Asian countries
L'India has traditionally been a partner of the West, also in terms of containing the Chinese giant (Pakistan's traditional ally) and has had a close relationship with Russia since its independence, especially in the defense sector. The management of relations with the USA, China and Russia – based on a balance between mutual interests – is essentially aimed at consolidating India's path of economic and technological growth with the aspiration of becoming the fourth global power. The International Monetary Fund's April 2025 projections indicate that India's GDP will reach USD 4.187 trillion by fiscal year 2025-26, which would allow it to overtake Japan in the world rankings and reach 4th place after the USA, China and Germany. The latter will potentially be achieved by India by 2028.
The India-China border agreement of October 2024 has broken the deadlock, leading to a reset in relations with Beijing, which was sealed at the recent Shanghai Cooperation Organization (SCO) Summit. In the medium term, relations between India and China are expected to improve not only as a consequence of the new vision established by the SCO Summit - “[the] two countries are development partners and not rivals”- but above all, for India, as the country, in order to consolidate its manufacturing industry, must inevitably increase its role within the Chinese, and therefore global, supply chain. China is already India's largest supplier, with a significant share of imports of intermediate goods.
With the USA, despite the conflict arising from the issue of tariffs, the relationship is believed to be beyond question precisely because anchoring to the West is key to balancing China's role, especially in Asia. It is also worth remembering that the USA is India's main trading partner and its largest export market. Finally, a relationship with Russia has been consolidated over the years, especially in the defense sector and recently in the energy sector, which, according to many analysts is destined to gradually decline.
It is in this context that India's activism in developing policies of strong diversification and trade multilateralism fits in. This ushers in the topic of free trade agreements which, as far as Italian companies are concerned, refers to that of India-EU: a topic to be monitored carefully due to the potential positive implications in terms of access to the Indian market.
New Delhi is clearly accelerating its efforts – also as a result of US policies – to conclude or renew Free Trade Agreements (FTAs) with strategic partners. There are several FTAs that India is negotiating: the most ambitious is extremely wide-ranging, and this is precisely what is being discussed with the European Union. The EU-India FTA is at an advanced stage of negotiations and is expected to be concluded by the end of the year.
Meanwhile, Prime Minister Modi and the Englishman Starmer signed the India-UK FTA agreement on July 24th, while negotiations for a bilateral trade agreement (BTA) with the USA continue. In recent months, India has initiated further negotiations for agreements with several countries, including New Zealand, Chile and the Gulf countries. The FTA with the EFTA countries (Iceland, Liechtenstein, Norway and Switzerland) is also expected to come into force in 2025, while the agreement with the ASEAN (Association of Southeast Asian Nations) countries is currently being upgraded. In particular, the agreements with Great Britain, the European Union and the USA would allow India to establish preferential relations with the major industrial economies, those of the G7, among which only Japan had a similar agreement with India.
