A landmark trade agreement between the European Union and India is reshaping global economic alliances, prompting Thailand to reassess its trade strategies. Facing a shifting landscape and a desire to lessen economic dependence on the United States, Thai economists are now looking to capitalize on opportunities presented by the new EU-India partnership and IndiaS burgeoning market-a nation with a population exceeding 1.4 billion and a rapidly expanding middle class. The move comes as geopolitical factors and protectionist measures contribute to a broader trend of diversifying trade relationships worldwide.
Thailand is looking to capitalize on new opportunities in India as a way to reduce its economic reliance on the United States, according to a leading economist. The move comes as the European Union and India finalize a landmark free trade agreement after nearly two decades of negotiations, a development spurred in part by protectionist policies enacted during the Trump administration.
Ursula von der Leyen, President of the European Commission, who traveled to New Delhi to announce the agreement alongside European Council President Antonio Costa, described the deal as “the mother of all deals.”
Von der Leyen emphasized that the agreement will create a free trade area encompassing over 2 billion people, with both sides poised to benefit significantly.
Indian Prime Minister Narendra Modi hailed the agreement as the “largest and most important” free trade agreement in the country’s history, stating it would strengthen the manufacturing and service sectors, boost investor confidence, and provide easier access to European markets for Indian farmers and small businesses.
Shifting Global Economic Power and Reduced Reliance on the U.S.
The EU-India deal reflects a clear shift in global economic power, occurring as Europe seeks to lessen its dependence on both the United States and China.
India, meanwhile, is working to shed its image as a protectionist nation and offset the impact of 50% tariffs imposed by the Trump administration, while simultaneously maintaining a balanced relationship with Russia.
According to a statement from the European Commission, the agreement is expected to double EU exports to India by 2032. India has agreed to eliminate or reduce tariffs on 96.6% of trade volume, while the EU will eliminate or reduce tariffs on 99.5% of Indian goods over seven years.
New Delhi has also agreed to open its automotive market to a quota of up to 250,000 vehicles, more than six times higher than previous trade agreements.
India is set to benefit from increased exports of labor-intensive goods, such as clothing, jewelry, and footwear, which were heavily impacted by U.S. tariffs.
The EU has also offered commitments regarding student mobility, post-study visas, and the opening of 144 service sectors. India, however, has excluded its politically sensitive dairy sector from the agreement.
India is the EU’s 9th Largest Trading Partner
The agreement is expected to be formally signed within approximately six months, following legal reviews, and will require ratification by the European Parliament. This follows a recent EU trade agreement with Mercosur in South America, marking another step in reducing reliance on the U.S. and China.
For India, this deal represents the fourth trade agreement secured by the Modi government since May, following agreements with the United Kingdom, Oman, and New Zealand. India is also pursuing expanded cooperation with Mercosur, Chile, Peru, and the GCC to access strategic resources and increase its global role.
Bilateral trade between the EU and India was valued at $136.5 billion USD in the fiscal year ending March 2025, with the EU accounting for over 17% of India’s total exports.
Economist Sees New Opportunities for Thailand, Pushes for Ranong Port Development
Dr. Kobsak Pootrakul, President of the Thailand Development Research Institute, Vice Chairman of Bangkok Bank, and Chairman of the Thai Capital Market Development Council (FETCO), said the EU-India free trade agreement (FTA) after nearly 20 years of negotiations represents a “historic deal” that clearly reflects a changing global economic landscape – one that will never be the same.
He believes this development presents a significant opportunity for Thailand to accelerate its search for new markets and reduce its dependence on the United States.
India, located in close proximity to Thailand, is a market with high potential, boasting a population of over 1.4 billion people, including a rapidly growing middle class of around 500 million, projected to reach 800-900 million in the coming years.
Dr. Kobsak argues that Thailand’s strategy should focus on meeting the primary needs of India’s middle class and government, particularly in the housing sector.
He added that India is facing challenges with dust and pollution from its construction sector, creating an opportunity for Thailand to market environmentally friendly building materials (Green Building Components) and modular construction technologies, areas where India currently lacks expertise and align with sustainable development goals.
More broadly, Dr. Kobsak noted a trend of countries reducing their reliance on the U.S. and forging closer ties with each other, as evidenced by the EU’s strengthened relationship with India, India’s expanding cooperation with China, and Canada’s ongoing trade negotiations with China.
“India is becoming a very interesting partner because it is under heavy pressure from the U.S., and therefore has a greater need to negotiate trade with other countries. This is an opportunity for Thailand to bring India into ASEAN or establish a bilateral trade agreement. New markets of interest for Thailand at this time include India, ASEAN, Bangladesh, and the Middle East,” Dr. Kobsak said.
Dr. Kobsak recommends that Thailand leverage its advantageous geographical position, particularly its deep-sea ports, under the Thai Landbridge project, which aims to capitalize on Thailand’s location connecting the Indian and Pacific Oceans. If designed and implemented effectively, this project could enhance the country’s competitiveness and increase its competitive edge against neighboring nations.
“While the entire Landbridge project may not be realized immediately, there are several sub-projects that can be initiated sooner. A priority project in the initial phase is “Ranong Port,” which has strategic potential due to its location and available space, making it suitable for development as a deep-sea port and a key regional trade gateway, serving as Thailand’s western trade portal.”
Ranong Port would help open trade routes to large, fast-growing markets such as India and Bangladesh, with economic growth rates around 8% per year, increasing opportunities for Thai exports and supporting the rapidly changing direction of the global economy.
However, Dr. Kobsak cautioned that Thai SMEs may face challenges in 2029 from increased competition from Chinese goods flowing into the ASEAN market.
“The next three years will be a turning point for businesses, requiring them to accelerate adaptation, find new markets, and utilize the more than 14 free trade agreements (FTAs) that Thailand already has in place.”
FETCO is also working to encourage technology and new industry companies investing in Thailand to list on the capital market, utilizing FTA privileges to increase the diversity of the market structure and enhance the potential of the Thai capital market.
Forecasts suggest that Thai manufacturing and exports in 2029 may experience only modest growth. A key solution is to accelerate the reduction of reliance on the U.S. market from around 20% to 15% and focus on new, high-growth markets such as China, India, ASEAN, and Europe to mitigate long-term risks.
Therefore, the Indian market has become a key target market for Thailand to seize opportunities.
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