NEW DELHI (Feb 28, 2026) — India and the European Union have released the provisional text of their historic Free Trade Agreement (FTA), establishing a mutual "Most Favoured Nation" (MFN) status for a five-year period.

Understanding the MFN Pledge

The MFN status ensures that neither party can offer a better trade deal to another nation without automatically extending the same benefits to each other. This "non-discrimination" clause locks in the competitive edge for both Indian and European businesses.

Key Highlights of the Pact:

• Duty-Free Access: 93% of Indian exports will enter the 27-member EU bloc without tariffs.
• Luxury & Spirits: India will significantly slash duties on European luxury cars and wines, making them more competitive in the domestic market.
• Protected Sectors: Sensitive agricultural items—including dairy, rice, sugar, and beef—are excluded from the deal to protect local farmers.
• Digital Trade: Both sides have pledged to remove barriers to e-commerce while maintaining regulatory autonomy over data.
• Fast-Track Disputes: A new mediation mechanism aims to resolve trade conflicts through mutual consent rather than lengthy litigation.

The Road Ahead

Negotiations for the deal concluded on January 27 after nearly 20 years of intermittent talks. The provisions will become legally binding once ratified by both the Indian Government and the European Parliament.

The FTA is expected to be fully operational by early 2027, potentially doubling bilateral trade within the next decade.