India and EU Forge Landmark Trade Agreement to Boost Bilateral Relations

Overview of the India-EU Trade Agreement

India and the European Union (EU) have reached a significant milestone by agreeing to grant each other Most Favoured Nation status for a period of five years, following the establishment of their trade agreement, which has been hailed as the "mother of all deals" by leaders from both sides. The draft agreement outlines plans to boost bilateral trade by lowering tariffs on 96.6% of goods, with certain agricultural products excluded, and prevents either party from offering more favorable tariff conditions to other partners for five years. This deal is projected to double EU exports to India by 2032 and includes commitments to align standards with WTO regulations, enhance customs cooperation, and promote digital trade, as reported by various sources. Furthermore, the EU will assist India in its greenhouse gas reduction efforts as part of the agreement. The deal is anticipated to come into effect within a year after legislative approval.

Key Features of the Draft Agreement

What does the draft of the India-EU trade deal show?

The draft agreement reveals that both parties have committed to refraining from imposing new import or export restrictions beyond the guidelines set by the World Trade Organisation (WTO) and to enhance cooperation on digital trade. To facilitate smoother trade, New Delhi and Brussels will align food safety and plant health measures with WTO standards and simplify certification and audit processes. Notably, agricultural products such as soya, beef, sugar, rice, and dairy are excluded from the trade deal.

The text also outlines plans for improved customs cooperation and expedited clearance of goods, with commitments becoming binding after ratification. The two sides are expected to start exchanging annual import data one year after the agreement takes effect to monitor its implementation and the utilization of tariff preferences. Additionally, they have agreed to ensure fair and accessible appeal processes for customs decisions impacting imports, exports, or goods in transit.

On the digital trade front, India and the EU have pledged to eliminate unjustified barriers and foster a secure online environment. The draft acknowledges privacy as a fundamental right while maintaining both parties' authority over personal data protection and cross-border transfer regulations. It also advocates for paperless trade and the legal recognition of electronic contracts, signatures, and authentication. Separately, the EU will mobilize financial resources and investments to support India's initiatives aimed at reducing greenhouse gas emissions as part of the proposed agreement.

Prime Minister Narendra Modi announced the signing of the India-EU Free Trade Agreement on January 27. According to PM Modi, the FTA represents 25% of global GDP and one-third of global trade.