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Trump has driven up NATO's defence spending. Why that's good for India
Rutte applauded the unprecedented decision by member states to not only meet but exceed the 2 per cent of GDP defence spending benchmark, aiming instead for 5 per cent. The move appeared to impress Trump.
After announcing a ceasefire in the 12-day Middle East war, Donald Trump flew to The Hague for his first NATO summit since returning to the White House in January. NATO has never been among Trump's favoured topics—his criticism of European 'free-loading' has continued unabated into his second term.
The bigger picture is striking. The war in Ukraine, now in its fourth year, has reshaped Europe's security architecture and driven a fundamental transformation in NATO. What began as Putin's aim to 'Finlandise Ukraine' instead led to the 'NATO-isation' of Finland and Sweden—a reversal few foresaw.
This reawakening of Europe presents a timely opportunity for India to rethink its engagement with NATO and the continent—especially in terms of defence cooperation.
Also read: Europe is vital for lasting solution in Ukraine. Trump's Nobel obsession is blocking this
Trump pill, in effect
Trump's presidency was widely expected to herald the weakening, if not the outright dismantling, of NATO. His offhand remarks about buying Greenland by force and his view of Article 5 (NATO's collective security clause) as conditional on financial contributions alarmed many European leaders. Some even predicted the death of the West.
Paradoxically, Trump's confrontational stance may have saved NATO. His pressure finally forced European allies to boost defence budgets—something US presidents had long demanded. By threatening to pull back American guarantees, Trump got results that decades of diplomacy hadn't.
Since then, defence budgets across NATO have surged. Several countries are targeting 5 per cent of GDP for defence over the next decade—a monumental shift worth hundreds of billions of Euros annually. It's more than a fiscal adjustment; it reflects a wartime posture taking hold of a Europe traditionally focused on welfare over warfare.
Germany, under new Chancellor Friedrich Merz, has removed constitutional caps on defence spending. Poland's rising military stature further amplifies this transformation. Notably, these shifts have occurred even as internal divisions remain, and Europe supports Ukraine. Rather than faltering under the pressure of a prolonged war in its backyard, major European defence giants have entered long-term agreements with Ukrainian counterparts—defying early fears that the continent lacked the institutional stamina for such a war.
Also read: Japan is stepping back from NATO, not Indo-Pacific ties—China is watching the cracks closely
Strategic realignment
This is not the Europe we once knew. Its strategic pivot is broad and multi-dimensional. NATO has revised its doctrine, addressed Baltic vulnerabilities, and boosted hybrid threat readiness by working with the EU and institutions like the Hybrid Centre of Excellence in Helsinki.
Importantly, NATO now follows a '360-degree' strategy that covers not just conventional threats but also climate change, AI, disinformation, and critical infrastructure. This approach is shaping NATO's evolving relationship with the Indo-Pacific.
While Trump's return to office rekindles concerns over US reliability, it has also spurred Europe into contingency mode. The shift from complacency to realism is palpable.
Once declared 'brain dead' by France's President Emmanuel Macron, NATO now appears rejuvenated. Even as the US strategic engagement toggles between the CENTCOM and INDOPACOM theatres, NATO's internal consolidation is a milestone development.
From India's perspective, it could translate into two meaningful cooperation pathways –first, capitalising on NATO's (and Europe's) engagement with the Indo-Pacfic on hybrid threats, and second, developing more defence industry synergies at a time of unprecedented militarisation of the continent. These two are not mutually exclusive. But in my opinion, the latter offers better opportunities. Let's look at them one by one.
Indo-Pacific: Ambition vs. capacity
NATO's Indo-Pacific outreach—targeting China, emerging technologies, and climate-related risks—aims to preserve its global relevance. But with war at home, NATO's capacity to seriously engage in the Indo-Pacific remains constrained.
Further limiting NATO's Indo-Pacific role is Trump's renewed Middle East focus. CENTCOM has regained US attention, and Trump's early priorities appear to centre on countering Iran and re-engaging Pakistan, not deepening Indo-Pacific ties. For India, this pivot raises concerns. The Quad has yet to hold its first summit under Trump's new term, and US commitment to regional alliances like AUKUS seems uncertain. In Australia, Japan, and the Philippines, doubts are growing.
India, too, is wary. Trump's apparent overtures to Pakistan—regardless of their transactional nature—have complicated New Delhi's strategic calculations. Without firm US backing, NATO's Indo-Pacific push holds limited promise.
So, where does this leave India? If direct security cooperation with NATO, even in the non-traditional arena, is not imminent, the real window of opportunity lies in the continent itself: Defence industry cooperation and exports.
Also read: All Trump wants is a good deal. Ukraine war shows he'll even risk Europe for it
India's role in Europe's militarisation
With 32 of the world's most advanced economies poised to ramp up defence spending to unprecedented levels, the time is ripe for India to position itself as a stable supplier of military equipment. Indian MoD's goal of achieving Rs 50,000 crore in defence exports by the end of this decade aligns perfectly with Europe's search for reliable, diversified suppliers. Already, Indian defence companies are supplying secondary equipment to several European nations—notably France. The question is whether India can scale this engagement and integrate with the common procurement mechanisms now developing across Europe, including within NATO. It is a misnomer to think that NATO's military modernisation is all going to come from NATO countries.
South Korea's experience offers a compelling benchmark. In 2022, Seoul secured a $14 billion deal with Poland, delivering tanks, howitzers, and fighter jets under tight deadlines—a testament to its manufacturing agility and strategic alignment with NATO's goals. South Korea's success stems not just from industrial capability but also from its ability to navigate political preconditions and seamlessly integrate into NATO's defence planning architecture.
India, on the other hand, faces structural hurdles. We are not a NATO partner country and have been reluctant to sign administrative agreements with the EU that come with conditionalities related to human rights or long-term alignment with the EU's Common Security and Defence Policy (CSDP). This unease limits India's participation in joint procurement frameworks that could otherwise offer significant scale and market access.
Yet these obstacles are not insurmountable. Co-production initiatives through joint ventures with established players like South Korea and Israel—both of whom have strong defence ties with India and Europe—offer a pathway to circumvent bureaucratic hurdles. For instance, India and Israel could collaborate on developing and producing systems that serve the European market. Over 50 per cent of Israel's defence sales now go to Europe, a figure that speaks to the continent's urgency and Israel's responsiveness.
Strategic resilience
India's defence industrial base is at a crossroads. Transitioning from a buyer's ecosystem to a builder's ecosystem will require bold, strategic and timely decisions. While India may not export complete platforms to Europe, like it does for Armenia, there is a large market for secondary equipment, components, and co-produced systems. But this will only materialise if Indian firms are able to navigate Europe's procurement frameworks and if the government actively supports these ventures with the right diplomatic and trade instruments.
The West's security realignment, triggered by one of the most protracted conflicts since World War II, is not just a story about Europe. It is going to be a global supply chain story—about who builds and co-builds, who sells, and who co-sustains the defence infrastructure of the future, conjoined at the hip by technological innovation.
As NATO adapts to a more dangerous world, it is redefining what modern alliances look like—flexible, industrially coordinated, and geopolitically agile. India, with its growing industrial capacity and strategic aspiration, is well-positioned to be part of this shift. The lessons from NATO's reinvention are not just for Brussels—they are also for New Delhi.
Swasti Rao is a consulting editor at ThePrint and a foreign policy expert. She tweets @swasrao. Views are personal.
(Edited by Theres Sudeep)
