Next-Gen Trade Diplomacy: India-EU Draft Pact Blends Growth, Governance And Green Finance

Updated: February 27, 2026 22:55

Image Source: Times of India

A draft of the proposed India-European Union Free Trade Agreement reveals plans for five-year Most-Favoured-Nation treatment, annual import data exchange, WTO-aligned food safety norms, stronger customs cooperation, and EU-backed climate finance for India’s emissions reduction goals, signalling a deepening strategic and economic partnership.

The proposed India-European Union Free Trade Agreement (FTA) is set to significantly deepen bilateral trade, regulatory cooperation, and climate collaboration, according to draft text details reported by Reuters. The draft outlines time-bound Most-Favoured-Nation (MFN) treatment, enhanced customs facilitation, regulatory alignment in food and plant safety standards, and structured climate finance commitments from the EU to support India’s emissions reduction targets.

The draft text indicates that both sides will grant each other most-favoured-nation (MFN) treatment for five years after the agreement enters into force. This provision ensures non-discriminatory trade benefits and strengthens predictability for exporters and investors across sectors.

In a move aimed at improving monitoring and implementation, India and the EU will annually exchange detailed import data starting one year after the pact becomes operational. This mechanism is designed to track preference utilisation and ensure effective enforcement of agreed tariff concessions.

Key Highlights

India and the EU to grant most-favoured-nation treatment for five years after the pact enters into force
Annual exchange of bilateral import data to monitor implementation and utilisation of tariff preferences
Alignment of food safety and plant health regulations with World Trade Organization norms, alongside streamlined certification and audit procedures
Enhanced customs cooperation, faster clearance processes and binding commitments upon ratification of the agreement
Assurance of non-discriminatory, transparent and accessible appeal procedures for customs decisions affecting imports, exports or goods in transit
European Union commitment to mobilise finance and investment to support India’s emissions reduction targets under the climate framework of the FTA
Promotion of paperless trade, with legal recognition of electronic contracts, digital signatures and authentication mechanisms
Recognition of privacy as a fundamental right, while retaining full sovereign authority over personal data protection and cross-border data transfer rules
Agreement on digital trade rules aimed at reducing unjustified barriers and ensuring an open, secure and trusted online environment

The draft underscores a modern, rules-based trade architecture covering goods, sustainability and digital commerce. If finalised and ratified, the India-EU FTA could reshape supply chains, boost bilateral trade volumes and position both partners as key drivers of resilient and green global trade.

Source: Reuters

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