India and the European Union are set to extend Most Favoured Nation (MFN) status to each other once their landmark free trade agreement comes into force. According to a Reuters report, the pact will bind both sides to World Trade Organization (WTO) rules, ensuring no new import or export restrictions beyond global standards are imposed.
The agreement, concluded after nearly 18 years of negotiations, is expected to take effect within a year, following legal reviews and ratification by the European Parliament and Indian authorities. It aims to gradually eliminate or reduce tariffs on 96.6% of traded goods by value, with Brussels estimating that EU exports to India could double by 2032 and save European companies around €4 billion annually in duties.
Leaders Describe Agreement as Blueprint for Shared Prosperity
Prime Minister Narendra Modi called the deal “a new blueprint for shared prosperity,” while European Commission President Ursula von der Leyen described it as a free trade zone of two billion people, boosting economic security in a volatile global environment.
Under the agreement, India will phase out duties on 96% of goods by trade value over up to ten years, while the EU will open 99.5% of its market, with most tariffs falling to zero immediately or within seven years. Sensitive agricultural products such as dairy, rice, sugar, and beef are excluded.
The deal also codifies WTO-aligned standards for food safety and plant health, streamlines customs procedures, and includes binding appeal mechanisms.
Expanded Digital Trade and Sectoral Opportunities
Both India and the EU have committed to deeper digital trade cooperation, balancing cross-border data flows with privacy protections.
Indian exporters in textiles, leather, gems, and seafood are expected to gain immediate zero-duty access to the EU market. European companies, particularly automakers and alcohol producers, will benefit from significant tariff reductions in India.The agreement also opens up a wide range of services sectors and includes provisions on intellectual property, labour rights, and sustainable development, creating a comprehensive framework for trade, investment, and economic cooperation.
