Each month, this space will offer a view on how international events are impacting the Italian economic fabric. The series will focus not just on the operational impact of geopolitical events, but on how they change the strategic outlook for Italian firms and their partners. Each issue will aim to shed light on key opportunities and risks for Italian economic actors in an increasingly contested world order. As strategic competition gains traction, businesses that observe and learn to be comfortable in a fast-moving context will thrive. This space aims to help the observation leg of this journey. Occasionally, articles will include reflections stemming from conversations with public and private enterprises and academia.
How is the demand for political analysis evolving in Italy? What are the key geographic and industrial areas of interest? What are the most pressing concerns? “Italy on Board” seeks to answer these questions.
Prime Minister Narendra Modi’s recent visit to Rome underscores a broader trend: Europe has started to actively engage multiple trade blocs. Italian firms are well-positioned to play a trailblazing role in this new landscape. During the visit, Modi and Italian Prime Minister Giorgia Meloni elevated Italy-India relations to a Special Strategic Partnership. They set a bilateral trade target of €20 billion by 2029 and placed the India-Middle East-Europe Economic Corridor (IMEC) at the center of the agenda. The corridor, designed to connect Indian ports to European markets via Gulf infrastructure and the Mediterranean, had been effectively frozen since its announcement at the 2023 G20 summit.
The instability that originally slowed progress on the corridor is now the exact reason the project has become so urgent. While the Rome meeting confirmed strong political support for the project, it also highlighted that the challenges ahead have grown just as fast as its urgency. The visit also incorporated the EU-India Free Trade Agreement concluded in January 2026. This agreement will eliminate or reduce tariffs on over 96% of EU goods exports to India, saving European firms roughly €4 billion annually in duties.
This pattern is consistent enough to be called a trend. The EU-Mercosur agreement, twenty-five years in negotiation, entered provisional application on May 1. It creates a trading zone of 700 million people. The EU-Australia deal, sealed in March after eight years of talks that had repeatedly stalled, was explicitly attributed by both sides to the reconfiguration of global trade triggered by US tariff policy. The EU-Indonesia agreement followed the same logic. Brussels has concluded more consequential trade deals in the past twelve months than in the previous decade.
The transatlantic rift, whatever its ultimate resolution, has functioned as a driving mechanism. Negotiations that had stalled on agricultural quotas, regulatory alignment, or domestic political resistance in member states found new momentum. The alternative to multilateral diversification became visible and concrete. The EU’s €93 billion retaliatory package, suspended but not withdrawn, remains in the background. More importantly, the strategic imperative to reduce exposure to any single partner, whether Beijing or Washington, has become sufficiently broad-based across European capitals. This imperative has overridden the inertia that had characterized EU trade diplomacy for years.
The acceleration of EU trade diplomacy, started as a merely defensive reflex to US tariff pressure, also shows a growing awareness that trade architecture is strategic architecture. Control over value chains, industrial standards, critical raw materials, and energy supply has become the primary terrain of great power competition. This is more so than at any point since the Cold War. Italy, with its excellence in precision manufacturing, industrial machinery, and specialty chemicals, is present in several of the value chains where that competition plays out.
Italy’s goods exports reached €623.5 billion in 2024. The country maintained a 3.1% share of global markets and a commercial surplus of €55 billion. The aggregate figures are solid. The internal architecture, however, is worth examining. The first 500 Italian exporting firms account for over half the total export value. Small enterprises, which represent more than 60% of all exporting companies by number, contribute less than 10% of total value. In other words, Italy’s international competitiveness rests on a narrow base of large champions.
At first glance, this may bring into question the actual results of the State’s efforts to push a “system” of economic operators, chiefly SMEs, to expand abroad. However, the picture is less concerning. The filiera logic, which has long characterized Italian manufacturing clusters, means that when a champion gains new market access, the benefit propagates downstream. A large machinery group that expands into an Indian market newly opened by the Free Trade Agreement does not typically retool its entire supply chain. It takes its existing network of specialized component suppliers, precision mechanics, and material producers with it. Many of those suppliers will be the same Italian SMEs.
Italian champion firms, whether in industrial machinery, pharmaceuticals, aerospace components, or food and beverage, are not operating in sectors that lend themselves to rapid replication. As the new EU trade architecture opens, those firms are positioned to move first and move fast. They have the managerial infrastructure, the financial resilience, and the institutional relations to exploit the improved tariff landscape before it becomes fully priced into competitive dynamics.
Indeed, data from ITA and ISTAT suggest that the weakness of smaller Italian exporters is not primarily a competitiveness issue. It is rather a market entry problem. The cost of regulatory navigation, commercial intelligence, and relationship-building in unfamiliar markets is far higher for a firm of twenty people than for one of two thousand. The new trade framework, by lowering formal barriers, reduces but does not eliminate those costs. What reduces them further is the presence of established Italian anchors in a given market. These anchors create reference networks, logistical precedents, and institutional familiarity that smaller firms can leverage.
On top of piggybacking, another vehicle for closing that gap is already taking shape. Industry associations are increasingly functioning as collective intelligence platforms. They are pooling the resources needed to access the kind of strategic and regulatory expertise that individual SMEs cannot afford on their own. Such associations are beginning to provide specialized geopolitical and market analysis. This analysis, of the kind typically reserved for large corporate strategy teams, is being made available to smaller operators through expert briefings and sector-specific written reports. These reports are tailored to the actual product and market exposure of the membership.
The logic is straightforward. The association can buy that expertise once and distribute it across a hundred members. At that scale, the unit cost becomes manageable, and the quality of the input need not be compromised. As the new EU trade architecture generates both opportunity and complexity in equal measure, this model of shared intelligence is likely to become one of the more practical answers to the market entry problem. Data consistently identifies this problem as the binding constraint on Italian SME internationalization.
What the current moment also demands, however, is a recalibration of the relationship between public and private in European economies, Italy included. The long peace that followed 1989 allowed democratic states to quietly step back from their role as strategic coordinators of industrial capacity. That role is returning, not by ideological choice but by necessity.
The firms best positioned to navigate what comes next will be those that integrate geopolitical variables into their decision-making early and rigorously. This integration must occur across supply chains, investments, compliance, and market strategy. The task for Italian institutions is to ensure that the infrastructure accompanying this trade expansion reaches firms that lack the internal resources to navigate alone. This infrastructure includes SIMEST credit support, ITA market intelligence, and Cassa Depositi e Prestiti financing instruments. The trail the champions are marking needs to be wide enough for others to follow.
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