The recent trade agreement between India and the European Union serves as a prominent example of new economic alliances forming globally, as countries navigate a fragmented international landscape. Dr. Hal Brands, the Henry A. Kissinger Distinguished Professor of Global Affairs at Johns Hopkins SAIS, highlighted this deal as indicative of a broader transformation in global commerce.
Speaking at Elara Capital’s Ashwamedh – Elara India Dialogue 2026, Brands explained that the world economy is moving away from the post-Cold War era of convergence towards a more competitive and fragmented order. Nations are increasingly prioritizing resilience, diversification, and strategic autonomy in their economic decisions, driven by rising geopolitical tensions.
Geopolitical Volatility Reshapes Opportunities
Brands emphasized that while geopolitical instability presents significant risks for businesses and investors, it simultaneously unlocks new opportunities. This environment compels countries to rethink their economic dependencies, leading to innovation in sectors like defense, drones, and artificial intelligence. He also pointed to the emergence of “new maps of opportunity” through the development of alternative supply chains and critical-mineral partnerships.
The India-EU trade deal, in particular, illustrates how both parties are seeking to reduce reliance on existing dominant markets, such as the US. This strategic realignment reflects a global response to an increasingly uncertain geopolitical environment, fostering alternative economic partnerships.
From Globalisation to Fragmentation
The current shift is more profound than mere changes in trade policy under any single administration, Brands argued. He described it as a transition from global integration towards fragmentation, where geopolitical competition increasingly dictates economic choices. “The reason the world feels so unstable right now is that every element of the old order is breaking down at once,” he stated.
Tariffs and trade barriers are actively reshaping global commerce, while technological interdependence is now often viewed as a vulnerability. Consequently, critical resources like minerals, semiconductors, and strategic trade routes have acquired heightened geopolitical significance. Brands termed this trend the “weaponization of everything,” where economic dependencies can be leveraged strategically during periods of geopolitical competition.
India's Evolving Role in the New Economic Landscape
For India, this evolving global landscape presents a mix of challenges and prospects. Brands noted that many countries are adopting a hedging strategy, recalibrating their relationships with major powers. The India-EU deal is a clear manifestation of this changing pattern of economic alignment, alongside global efforts to build diverse supply chains and partnerships for critical minerals.
The broader implication for businesses and investors is that supply-chain decisions can no longer be based solely on cost and efficiency. Resilience and diversification are becoming paramount, as geopolitical considerations increasingly influence trade and investment flows. Brands concluded that geopolitical expertise will be as crucial for the private sector as it is for the public sector in the coming years, as investors must look beyond conventional economic indicators to understand the forces reshaping markets.