India and the European Union (EU) have decided to grant each other “Most Favoured Nation” (MFN) status for five years from the date the Free Trade Agreement (FTA) between the two parties will come into effect, as per the draft text of the pact released on Friday.According to the proposed agreement, both parties would give each other the same trade benefits like reduced tariffs, better market access and advantageous regulatory treatment, which they give to their most-favoured trading partners. The arrangement aims to provide a structure for trade between the two countries that is more balanced and reliable.The development came nearly a month after European Commission President Ursula von der Leyen and European Council President Antonio Costa had meetings with Prime Minister Narendra Modi in New Delhi in January to prepare the final draft of FTA.Hailed as the “Mother of All Deals”, the FTA marks a significant milestone in one of India’s most strategic economic partnerships. Under the agreement, at least 93 per cent of Indian exports will make its way to the 27-nation bloc duty-free, while EU luxury cars and wines will have reduced import prices.Moreover, tariffs on 96.6 percent of the value of EU goods exported to India will either be removed or lowered. However, a number of highly sensitive agricultural products, such as soy, cattle, sugar, rice, and dairy, have been excluded from the agreement.According to the draft, both parties have also committed to strengthening customs cooperation, expediting the clearance of products and establishing more transparent procedures for traders if the agreement is approved.India and the EU have agreed to lower unwarranted barriers to digital trade and promote an open and safe online environment. Additionally, it encourages paperless trade and acknowledges the legitimacy of electronic signatures, contracts and associated authentication methods.Furthermore, in an area that is still both politically sensitive and financially significant, the proposal enables both parties to support digital trade liberalisation in principle while leaving space for domestic law.