A joint committee will conduct a review in the fourth year to decide whether to extend most favoured nation status beyond five years
| Photo Credit:
Sushil Kumar Verma
India and the EU have agreed to a trial ‘five-year MFN provision’ in their bilateral Free Trade Agreement (FTA) committing to extend to each-other better trade terms if offered to other countries in subsequent deals, particularly within the services sector.
A high-level joint committee will conduct a major review in the fourth year to decide whether to extend this status beyond five years, per the provisional text for the India-EU FTA which was shared on Friday.
The EU has extended MFN (most favoured nation) provision to India in the area of carbon border adjustment measures (CBAM) wherein it has agreed to extend to the country any flexibilities in implementation that may be offered to third countries.
The extension of the MFN provision beyond five years has been directly linked to the facilitation of entry and stay of Indian students in the bloc and also to the conclusion and adoption of social security or other similar agreements.
“At the beginning of the fourth year following the entry into force of this agreement, the Joint Committee shall review the developments pertaining to the granting or maintenance of treatment relating to the entry and stay of Indian students in the Union, including their work rights, in the context of relevant EU law and existing bilateral agreements with India, and the maintenance, conclusion and adoption of social security agreements or similar arrangements or agreements in the context of the temporary movement of service suppliers, and decide whether or not to continue the treatment…,” the text noted.
The MFN provision in services will not be applicable in a couple of cases. One exception relates to benefit of any treatment resulting from an international agreement for the avoidance of double taxation or other international agreement or arrangement relating wholly or mainly to taxation.
A second exception is for measures providing for recognition, including the recognition of the standards or criteria for the authorisation, licencing, or certification of a natural person or commercial presence to carry out a service, or the recognition of prudential measures as referred to in the GATS Annex on financial services.
Published on February 28, 2026