Published by Global Banking & Finance Review®
Posted on February 27, 2026
2 min readLast updated: April 2, 2026
Add as preferred source on GoogleA draft India-EU trade deal includes a five-year mutual Most Favoured Nation (MFN) clause, WTO-aligned trade guardrails, and digital trade cooperation — aiming to double EU exports by 2032 with €4 billion in annual duty savings.
By Manoj Kumar and Kanjyik Ghosh
Feb 27 (Reuters) - The European Union and India plan to grant each other Most Favoured Nation status after their trade deal takes effect, preventing either from offering better tariff terms to other partners for five years, a draft of the text showed on Friday.
India and the European Union struck a long‑delayed deal last month aiming to slash tariffs on most goods and boost two‑way trade amid growing global trade tensions elsewhere.
The deal, likely to be effective in a year after legislative ratification, is expected to double EU exports to India by 2032 by eliminating or reducing tariffs on 96.6% of traded goods by value, and will lead to savings of 4 billion euros ($4.7 billion) in duties for European companies, the EU has said.
India and the EU have said agriculture-related items like soya, beef, sugar, rice and dairy have been left out of the purview of the trade deal.
Both sides have agreed to lock in commitments not to impose new import or export restrictions beyond World Trade Organization rules and to deepen cooperation on digital trade under a proposed free-trade agreement, a draft text released by India's trade ministry showed.
To ease trade flows, New Delhi and Brussels will align food safety and plant health measures with WTO standards and streamline certification and audit procedures.
The text also envisages enhanced customs cooperation and faster clearance of goods, with commitments becoming binding after ratification.
The two sides will begin exchanging annual import data one year after the pact takes effect to monitor implementation and the use of tariff preferences. They also agreed to ensure non-discriminatory and accessible appeal procedures for customs decisions affecting imports, exports or goods in transit.
On digital trade, India and the EU committed to curbing unjustified barriers and promoting an open and secure online environment.
The draft recognises privacy as a fundamental right while preserving both sides’ authority over personal data protection and cross-border transfer rules.
It also promotes paperless trade and legal recognition of electronic contracts, signatures and authentication.
Separately, the EU will mobilise finance and investment to support India’s efforts to cut greenhouse gas emissions under the proposed pact, the draft showed.
($1 = 0.8461 euros)
(Reporting by Manoj Kumar in New Delhi and Kanjyik Ghosh in Barcelona; Editing by Kevin Liffey and Hugh Lawson)
The deal includes tariff reductions on 96.6% of traded goods, digital trade cooperation, and alignment with WTO rules on imports and exports.
The trade deal is expected to become effective about a year after legislative ratification.
No. Agricultural items like soya, beef, sugar, rice, and dairy are excluded from the deal.
The draft pact advances paperless trade, legal recognition for e-contracts, and privacy protections, while supporting open and secure digital commerce.
The agreement will cut or eliminate tariffs on most goods, potentially doubling EU exports to India by 2032 and saving 4 billion euros in duties.
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