India has been working on a Trade and Economic Partnership Agreement (TEPA) with European Free Trade Association (EFTA) countries comprising Switzerland, Iceland, Norway & Liechtenstein. The Union Cabinet chaired by the Prime Minister has approved the signing of the TEPA with EFTA States.
Piyush Goyal, Minister of Commerce and Industry, Food and Consumer Affairs and Textiles said: “TEPA is a modern and ambitious Trade Agreement. For the first time, India is signing FTA with four developed nations – an important economic bloc in Europe. For the first time in history of FTAs, binding commitment of $100 bn investment and 1 million direct jobs in the next 15 years has been given. The agreement will give a boost to Make in India and provide opportunities to young & talented workforce. The FTA will provide a window to Indian exporters to access large European and global markets.”
From the EFTA bloc, the four ministers who may attend the signing were: Guy Parmelin, Swiss Federal Councillor and Head of the Department of Economic Affairs, Education and Research; Bjarni Benediktsson, Minister of Foreign Affairs of Iceland; Dominique Hasler, Minister of Foreign Affairs of Liechtenstein; and Jan Christian Vestre, Minister of Trade and Industry of Norway. India and EFTA have been negotiating the pact since January 2008 to boost economic ties.
After a hiatus of nearly 16 years, on March 10th, 2024 the free trade deal got sealed to integrate and strengthen supply chains, attract investments and generate new business opportunities.
The agreement comprises of 14 chapters with main focus on market access related to goods, rules of origin, trade facilitation, trade remedies, sanitary and phytosanitary measures, technical barriers to trade, investment promotion, market access on services, intellectual property rights, trade and sustainable development and other legal and horizontal provisions.
EFTA is an important regional group, with several growing opportunities for enhancing international trade in goods and services. EFTA is one important economic block out of the three (other two – EU &UK) in Europe.
Among EFTA countries, Switzerland is the largest trading partner of India followed by Norway. The funds from the EFTA region include Norway’s $1.6 trillion sovereign wealth fund, the world’s largest such ‘pension’ fund, which posted a record profit of $213 billion in 2023 on the back of strong returns on its investments in technology stocks.
The Trade and Economic Partnership Agreement (TEPA) with EFTA is the third major trade deal finalized by the Modi government since early 2022. India has already signed separate bilateral agreements with the United Arab Emirates (UAE) and Australia.
India’s key imports from the four countries are gold ($20.7 billion in 2021-22), silver, coal, pharmaceuticals, vegetable oil, dairy machinery, medical items, crude and scientific equipment. It exports chemicals, iron and steel, gold, precious stones, yarns, sports goods, glassware and bulk drugs to these nations.
The EFTA is offering 92.2per cent of its tariff lines for India’s export. With this, India will get 100per cent market access for its non-agri products. Think tank Global Trade Research Initiative (GTRI) said that exporting agricultural produce to Switzerland remains challenging due to the complex web of tariffs, quality standards, and approval requirements.
“Under the treaty, India has opened 82.7per cent of its tariff lines, which covers 95.3per cent of EFTA exports. However, the effective duty on gold remains unchanged, even though more than 80per cent of EFTA imports to India are gold,” it added.
After signing this trade agreement with EFTA, the Government will phase out custom duties on imported goods over a period of time, which will enable domestic consumers to access high-quality Swiss products such as watches, chocolates, biscuits, and clocks at lower prices.
Sensitivity related to production-linked incentives (PLI) schemes in sectors such as pharmaceuticals, medical devices, and processed food were also considered while extending offers. Sectors such as dairy, soya, coal, and sensitive agricultural products are not covered by the TEPA. The EFTA nations have also allowed Ayush services under the treaty.
The timing of this deal is crucial as over 64 countries, including India, are headed into elections this year, which could mean a long pause in free trade agreements (FTAs) for India and its trade partners. However, time is running out as the global supply chain is fast undergoing a reset with investment, for the first time in the recent past, moving away from China. India is also negotiating trade deals with the European Union the UK, and several other smaller countries like Oman and Peru, though it seems like a long journey ahead.
India is seen as top contender by global inventors; thus, it’s India’s turn to leverage this golden geo-strategic and economic opportunity in its favour.
