India, EU agree on Most Favoured Nation status for 5 years

India and the EU have agreed to grant each other ‘Most Favoured Nation’ status for five years from the date their trade agreement comes into force, according to a draft of the deal released on Friday. This means neither side can give more favourable tariff terms to other trading partners for five years. The agreement also contains an annexure that provides for mediation, allowing disputes to be resolved through a fast-track process with the help of a mutually agreed mediator. To make trade smoother, both countries will bring food safety and plant health rules in line with World Trade Organization standards. Certification and audit procedures will also be simplified.Both sides have also committed to deeper digital trade cooperation, recognising privacy as a fundamental right while retaining authority over personal data protection and cross-border data flows.
Both sides have agreed not to introduce new import or export curbs beyond what is allowed under World Trade Organization rules. They have also decided to step up cooperation in digital trade under the proposed free trade agreement, as per the draft.
The pact, concluded after nearly 18 years of negotiations, is expected to take effect within a year following legal vetting and ratification by the European Parliament and India’s authorities. It will progressively eliminate or reduce tariffs on 96.6% of traded goods by value. Brussels estimates the deal could double EU exports to India by 2032 and save European companies around €4 billion annually in duties.On January 27, the two sides announced that talks on the free trade agreement had concluded. The pact, described as the ‘mother of all deals’, will allow 93 per cent of Indian exports to enter the 27-nation bloc duty-free. Imports of luxury cars and wines from the European Union are also set to become cheaper.