At the Munich Security Conference (it ended last week), where global defence leaders gather each year to talk about war, the most consequential negotiations often have little to do with weapons. In light of the use of tariffs as a geopolitical tool by the president of the United States of America, Donald Trump, one country stood out in conversation: India.
For both the US and the European Union, India has become indispensable. Accessing the market of the most populous nation on earth and one of the world’s fastest-growing major economies is a key goal of the EU. Perhaps most crucially, India is a potential democratic counterweight to China. But as officials met in Munich’s glass corridors and side rooms, it became clear that Washington and Brussels are not pursuing the same relationship. They are offering India two different roles in the emerging global order.
Europe wants a market. America wants an ally.
The EU, led in large part by Germany, has negotiated a sweeping free trade agreement with India that would lower tariffs on European exports, strengthen protections for European investors, and open India’s economy more fully to European firms. For Germany, whose economic model depends heavily on selling cars, machinery and chemicals abroad, the urgency is obvious. As China becomes a less reliable destination for German exports, India represents one of the few markets large enough to help fill the gap.
Germany’s prosperity has long rested on its ability to produce more than what it consumes and sell the surplus overseas. For decades, China absorbed much of that excess. But geopolitical tensions and slowing Chinese growth have forced German industry to search for alternatives. India, with its expanding middle class and still-protected domestic industries, has become the most promising candidate.
At the centre of the negotiations are tariffs, particularly on automobiles. India imposes tariffs as high as 110% on imported cars, protecting its domestic manufacturers. German automakers have made the lowering of those tariffs a priority. Access to India’s market would allow companies like Volkswagen, BMW and Mercedes-Benz to expand exports without relocating production. For Germany, trade liberalisation with India is not simply an opportunity. It is a structural necessity.
The US, on the other hand, is taking a different approach. Rather than pursuing a comprehensive trade agreement, Washington has focused on deepening defence and technology ties and expanding cooperation on semiconductors, Artificial Intelligence and military coordination. India has become a key partner in the US’s efforts to counter China’s growing influence in Asia.
In Munich, American officials spoke less about tariffs than about alignment. India is central to the US’s vision of a new Indo-Pacific security architecture. Joint military exercises have expanded. Defence agreements have multiplied. Technology partnerships have deepened. The goal is not primarily to sell American goods, but to integrate India into a strategic network capable of balancing China.
The difference reflects the structure of the two economies. Germany and Europe more broadly depend heavily on manufacturing exports. Trade agreements help sustain industrial production and employment. The US, while still a major exporter, derives more of its global power from technology, finance and military reach. American companies already operate globally. What Washington seeks from India is not market access, but geopolitical alignment.
This also speaks to the ways in which Europe and the US are diverging geopolitically. The EU wants to hedge its bets in a shifting, multipolar world. The US seeks to maintain military and trade dominance.
Even as American officials emphasise India’s centrality to their strategy, there are signs of unease in Washington about how fragile that alignment remains. The senator, Mark Warner, a Democrat from Virginia and co-chair of the Senate India Caucus, has been one of the US Congress’s strongest advocates for integrating India into a Western-aligned technology and security architecture. But speaking to reporters in Munich, he warned that recent tensions risked undermining years of careful courtship. “We spent 15 years trying to move India away from China and Russia”, Warner said. “The president slaps an extra 25 percent tariff on India because of ego reasons. Modi wasn’t enough of a supplicant about the Nobel Prize”, he added, referring to the Indian prime minister’s refusal to engage with Trump’s bid for the Nobel Peace Prize after he claimed to have ‘solved’ the India-Pakistan war. “And now Modi is literally holding hands with Putin. The Indian diaspora in America is really scratching its head.”
His comments reflected a deeper anxiety within Washington’s national security establishment: that India, long viewed as a democratic counterweight to China, is not firmly anchored in the American orbit, but remains willing to shift opportunistically between rival powers. Unlike Europe, which is trying to bind India through trade and market integration, the US is attempting geopolitical alignment — an elusive goal when faced with India’s traditional non-alignment. Warner’s frustration underscored how easily that project can unravel.
Europe’s negotiations with India are driven by economic vulnerability, leaving it less able to resist the kind of geopolitical manoeuvring that frustrates American officials. Germany’s export-driven model requires large external markets. As China becomes less dependable, India offers a rare alternative. Securing access to its market could help preserve Germany’s industrial base.
The US faces a different challenge. Its concern is not where to sell cars, but how to maintain strategic advantage in a world where China is both an economic and military rival. Strengthening ties with India helps counterbalance Beijing’s influence and reduces the risk of strategic isolation.
India, in the meantime, is acutely aware of its own leverage. Its government has resisted pressure to fully open its markets, using tariffs and industrial policy to build domestic manufacturing capacity. Unlike smaller economies, India cannot be easily compelled to accept unfavourable terms. Both the US and the EU need India more than India needs them.
This gives New Delhi unusual room to manoeuvre. It can deepen defence ties with Washington while negotiating trade concessions with Brussels. It can extract investment while preserving policy autonomy. Its position reflects a broader shift in global power as countries once considered peripheral gain the ability to shape the terms of their integration into the global economy.
At Munich, this shift was unmistakable. India was no longer merely a participant in the international system. It was an object of competition between two Western powers seeking to secure their economic and strategic futures.
For Germany and the EU, India offers a way to sustain an economic model built on exporting industrial goods to the world. For the US, India offers a partner in a geopolitical contest that will define the coming decades.
Both relationships are framed as partnerships between democracies. Both promise mutual benefit. But they serve different purposes.
Europe is trying to secure demand for its industries. America is trying to secure balance against its rival.
In Munich, where security and economics increasingly blur, the distinction became harder to ignore.
Carol Schaeffer is a journalist based in Berlin, Germany, and is a senior fellow at the Atlantic Council in Washington D.C.