Trade Deal Draft Shows India, EU Agree On 5-Year Most Favoured Nation Status

New Delhi: The India-European Union (EU) trade agreement is set to revolutionise bilateral trade relations, with both sides agreeing to grant each other Most Favoured Nation (MFN) status for a period of 5 years. According to the draft released on Friday, the trade deal turned out to be a mega success in the long-standing trade negotiations between the two economic powerhouses.

As per the trade analysts, the agreement, hailed as the ‘mother of all deals’ by EU President Ursula Von Der Leyen, was to create a free trade zone covering nearly 2 billion people, representing around a quarter of the world's population and about 25% of global GDP. Prime Minister Narendra Modi lauded the deal, stating that it would unlock huge economic opportunities for India's 1.4 billion citizens and hundreds of millions across 27 EU member states.

As per information, under the agreement, India will eliminate or reduce tariffs on 96.6% of EU exports, while the EU will reciprocate by reducing tariffs on 99.5% of Indian goods. It is expected to result in annual duty savings of up to EURO 4 billion for European companies. Key sectors benefiting from the deal include automobiles, machinery, chemicals, pharmaceuticals, and textiles.

The deal also included provisions for services, investment, and intellectual property protection. India has committed to liberalizing services trade, with the EU offering access to 144 services sub-sectors and India opening 102 sub-sectors. The agreement is expected to boost India's exports of textiles, leather, marine products, gems and jewelry, and engineering goods.

Following the finalisation of the deal, Commerce Minister Piyush Goyal outlined that the deal would benefit labour-intensive sectors, with USD 35 billion worth of exports expected to become duty-free immediately. The agreement is also expected to attract investments, create jobs, and strengthen India's position as a manufacturing and services hub for European companies.

The formal signing of the deal is expected to take place after legal vetting, which may take around 5 to 6 months. Once implemented, the agreement is likely to have a big positive impact on the EU's economy, with estimated annual goods exports to India increasing by 107.6% by 2032.