When Canada’s prime minister, Mark Carney, electrified the crowd at the World Economic Forum in Davos, Switzerland, by declaring “a rupture in the world order” and that “middle powers must act together” to survive, he may as well have called on India by name.
Within a week, Prime Minister Narendra Modi of India was standing beside Ursula von der Leyen, the president of the European Union’s executive arm, in New Delhi to announce “the mother of all deals” — a trade agreement, including defense provisions, that both sides had been struggling to see through for nearly 20 years.
The trade deal promises a marketplace of 2 billion people and to double trade within six years. It also represents a new network of international ties designed to catch what can be saved from a post-American wilderness.
India is not a small country, but it counts as an especially relevant “middle power” in any new arrangement of the world’s economies. Its population, at 1.4 billion, is the biggest of all, and its economy has muscled its way into the top five, alongside Japan and Germany, even with per capita income levels a tiny fraction of theirs.
An accelerating frenzy of activity between India and other middle powers was kicked off by a free-trade agreement with Britain last year that had been stalled for years. Then came deals with Oman and New Zealand in December.
The bilateral agreements point to a change of direction for India, with Modi’s push for self reliance taking a back seat. The idea that India can best defend itself by avoiding economic entanglement with other countries has a long history, but the European Union, Canada and others are making the case that strength lies in deepening their trade ties.
Leaders from Germany, Japan, the United Arab Emirates and Saudi Arabia have all trooped through New Delhi in recent weeks, in each case presenting an agreement to cement ties with India. Brazil’s president, Luiz Inácio Lula da Silva, is coming in February.
Carney is next up on the list. He is expected to lead a Canadian delegation to New Delhi in March to drive home another trade agreement.
Carney’s Davos speech did not name the Trump administration or the role its tariffs played in upending the old order, but India did not need it to be made explicit. Last summer, Trump slapped a combined 50% tariff on most goods imported from India, half of it “reciprocal” and the other half an unanticipated punishment for buying oil from Russia.
Until then, 25 years of diplomacy between the United States and India had been aimed at forging deeper ties, partly to counter the rising power of China. India was reluctant to side with the United States against China, said Tanvi Madan, a senior fellow at the Brookings Institution in Washington, because it hoped to “to do to China what China did to the West: to get their talent, get their technology” and eventually compete with China head on.
But India has suffered a persistent disadvantage in catching up with China or disciplining wayward partners like the United States because it holds no choke points in the global supply chain as, for instance, China has over rare-earth minerals or Taiwan and the Netherlands do with advanced semiconductor manufacturing.
With Chinese goods flooding global markets and Chinese troops staking out Himalayan territory that India claims as its own, India could use a helping hand against China like never before. If not the United States, other countries will have to do.
A new deal with Canada would represent a remarkable turnaround. In October 2024, India and Canada expelled many of each other’s diplomats in a spat over the killing of a Sikh activist living near Vancouver.
The relationship between India and Canada has been visibly on the mend since Modi attended the Group of 7 summit in Alberta at Carney’s invitation in June 2025, shortly before the shock of the American tariffs.
While India already has long-standing relationships with many middle powers, those ties suddenly look more meaningful to India’s future. D.K. Srivastava, the chief policy adviser for EY India, an auditing firm, wrote that India “enlarging its bilateral agreements with other large economies and country groups” should mitigate the effects of global uncertainty.
How much other countries can repair damage done by American tariffs is unclear. The United States is India’s biggest market and its exports there shrank drastically in the first months after the 50% tariff was imposed. Its currency shrank 7% against the dollar last year.
India compensated by doubling down on electronics, which are exempt from the tariffs, and widening its market share in other countries — such that its total exports actually grew last year.
Its new trade agreements, complemented by a raft of economic reforms at home, may provide another boost.
“In India, we eventually use a crisis to institute reform,” said Rajat Kathuria, an economist and dean of the Shiv Nadar University near New Delhi. “Like a leaky roof, leading to a renovation of the house.”
The New York Times Services