Draft trade deal proposes reciprocal Most Favoured Nation status between India and the European Union for five years.
Move intended to strengthen trade ties and reduce discriminatory tariffs and trade barriers.
Negotiations form part of ongoing efforts to finalise the India–EU Free Trade Agreement.
India and the European Union are set to grant each other Most Favoured Nation (MFN) status for a period of five years, according to details emerging from a draft trade agreement currently under negotiation.
The proposed provision would ensure that both sides offer each other the same trade advantages, such as lower tariffs, improved market access and favourable regulatory treatment—that they provide to their most preferred trading partners. The arrangement is intended to create a more predictable and balanced framework for trade between the two economies.
Officials involved in the negotiations say the MFN clause would help reduce discriminatory trade practices and strengthen economic cooperation. It would also encourage businesses on both sides to expand cross-border investments and supply chains.
The proposal forms part of broader negotiations for the long-pending India–EU Free Trade Agreement (FTA), which aims to significantly increase trade in goods and services between the two partners. Talks on the agreement were revived in 2022 after remaining stalled for several years.
The European Union is one of India’s largest trading partners, while India represents a major market for European exports and investments. Negotiators from both sides have been working to address issues related to tariffs, market access, intellectual property, and sustainable development standards.
Trade experts note that granting reciprocal MFN status for a fixed period could serve as a confidence-building measure while the broader trade agreement is finalised.
If concluded, the India–EU trade pact is expected to deepen economic integration, facilitate smoother trade flows, and open new opportunities for industries ranging from manufacturing and pharmaceuticals to technology and services.
