FEBRUARY 7 — When Indian Prime Minister Narendra Modi moves from European capitals to Kuala Lumpur, the itinerary is not merely diplomatic choreography. It is a signal of how trade, geopolitics and strategic alignment are being rewired in a fractured global order.

The India–European Union Free Trade Agreement was announced on 27 January 2026 at the 16th EU–India Summit in New Delhi, attended by Indian Prime Minister Narendra Modi and European Commission President Ursula von der Leyen.

Trade talks between Brussels and New Delhi began as far back as 2007, but momentum returned only recently, spurred by renewed protectionism following US President Donald Trump’s revival of a muscular “America First” doctrine in January 2025.

The agreement underscores a fundamental shift in global trade, reflecting a new reality: trade has become a strategic instrument, shaped as much by economic security and geopolitical resilience as by tariffs and market access.

The EU–India deal offers a clear counter-signal: free trade is not over, but it is being redesigned. Countries are becoming more selective, favouring bilateral and strategic partnerships over blanket liberalisation.

Having surpassed Japan as the world’s fourth-largest economy, India offers Europe not just an alternative manufacturing base, but access to one of the fastest-growing consumer markets.

For the EU, the deal with India is a cornerstone of its diversification strategy. In 2024, over 21 per cent of EU imports came from China, while China absorbed only 8.3 per cent of EU exports — leaving Europe with a €304 billion trade deficit. The EU–India agreement guarantees market access amid rising trade uncertainty, especially following strained relations with Washington after Trump’s threat of punitive tariffs.

It is against this backdrop that Modi’s engagement with Malaysia takes on added significance. As India forges “future-ready” trade deals, Malaysia — at the heart of regional supply chains — stands to benefit from deeper India-linked investment and manufacturing networks.

This aligns with Prime Minister Anwar Ibrahim’s recalibration of Malaysia’s trade strategy.

In 2025, the European Union accounted for about 7–8 per cent of Malaysia’s total trade, with year-to-date trade reaching RM165.6 billion by September, driven by rising exports in electrical and electronics and advanced manufacturing.

Anchored in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP), Malaysia is further reinforced by renewed EU engagement. Malaysia is positioning itself as a connector economy linking Northeast Asia, South Asia and Europe — reflecting the same logic now shaping India–EU trade.

Beyond macro trade flows, the visit also opens potential avenues for deeper Malaysia–India cooperation in strategic sectors such as semiconductors, digital infrastructure, green technologies and halal-based industries, where both economies are seeking to move further up the value chain.

Modi has been explicit about his ambitions. The EU deal, he argues, “has boosted global confidence in stability, while recent agreements with the United States signal speed and momentum.” Beneath the political rhetoric lies a sharper truth: India is embedding itself into multiple economic blocs at a time when others are retreating behind walls.

The lure of India is not just its economic trajectory — projected to surpass Japan and Germany to become the world’s third-largest economy — but also its perceived role as a long-term geopolitical counterweight in an era of great-power rivalry.

This is not merely the redrawing of trade maps — it is the rewriting of power itself. Economic alliances are fast overtaking military pacts as the preferred instruments of global influence.

As protectionism tightens its grip and multilateral institutions falter, India is wielding trade as a tool of strategic independence, expanding its reach without provoking confrontation.

For Europe, grappling with industrial fatigue and geopolitical uncertainty, India represents both opportunity and insurance.

For Malaysia, positioned at the crossroads of Asian supply chains, this shifting alignment presents a strategic opening to deepen its role as a connector economy linking South Asia, Northeast Asia and Europe. It also presents responsibility. As Asean’s successful chair, Malaysia stands at the helm of a region increasingly central to the future of global commerce.

The emerging reality is unmistakable. Power in the twenty-first century will not be determined solely by military reach or economic scale. It will belong to nations that can weave durable networks of trust across continents, connect markets without coercion, and sustain prosperity amid uncertainty.

In that unfolding geometry of power, the quiet builders of trade bridges may ultimately shape the world more profoundly than the loud architects of rivalry.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.