In a historic move aimed at boosting trade and investments, India has inked a significant free trade agreement worth USD 100 billion with the European Free Trade Association (EFTA). This deal, which comes after years of negotiations spanning over a decade, promises to lead in a new era of economic collaboration between India and the four-member EFTA bloc comprising Switzerland, Norway, Iceland, and Liechtenstein. The agreement, officially termed the India-EFTA Trade & Economic Partnership Agreement (TEPA), is poised to bring substantial benefits to both regions, including increased exports, investment promotion, job creation, and sectoral collaboration.
About the Agreement
TEPA represents a historic milestone in the bilateral relationship between India and the EFTA nations. Negotiations for this agreement commenced in 2008, with a total of 21 rounds of discussions culminating in its signing on March 10, 2024. Under the agreement, India will gradually eliminate most import tariffs on industrial products from EFTA countries over a span of 15 years. In return, the EFTA bloc has committed to substantial investments across various sectors in India, including pharmaceuticals, machinery, and manufacturing. Notably, India sought an investment commitment of USD 50 billion during the first decade post-implementation of the agreement, with an additional USD 50 billion over the subsequent five years, aimed at generating one million direct employment opportunities in India.
Understanding EFTA
European Free Trade Association (EFTA) is an intergovernmental organization established in 1960 by Iceland, Liechtenstein, Norway, and Switzerland. It was formed with the objective of promoting free trade and economic integration among its member states. Unlike the European Union (EU), EFTA countries maintain their sovereignty while benefiting from cooperation in trade matters. India currently ranks as the fifth-largest trading partner of EFTA, with bilateral trade estimated at USD 25 billion in 2023.
Key Highlights of the Agreement
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Boosting Exports and Investments: TEPA aims to enhance exports of key Indian products such as pharmaceuticals, garments, chemicals, and machinery to EFTA nations while attracting investments in sectors like automobiles, food processing, railways, and the financial industry.
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Employment Generation: The agreement's investment commitments are expected to create significant employment opportunities in India, contributing to the country's economic growth and prosperity.
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Tariff Reductions and Market Access: Tariff concessions under the TEPA will make Swiss products more affordable for Indian consumers, particularly items like chocolates, watches, biscuits, seafood, fruits, and beverages. Additionally, various industrial goods, including watches, smartphones, medical equipment, textiles, and iron products, will become more accessible to Indian consumers due to reduced tariffs.
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Sectoral Collaboration: TEPA encompasses 14 chapters covering various aspects such as trade in goods, rules of origin, intellectual property rights, trade in services, investment promotion, government procurement, and technical barriers to trade. This comprehensive framework facilitates deeper collaboration across key sectors of mutual interest.
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Impact on Fish and Marine Products: In addition to industrial products, the TEPA also addresses market access for fish and other marine products. The commitment to eliminate customs duties on these items underscores the importance of the fisheries sector in bilateral trade relations. By removing trade barriers and facilitating greater access to each other's markets, India and EFTA member states aim to capitalize on the mutual benefits offered by the fisheries industry.
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Agricultural Products: The agreement also includes provisions related to agricultural products. EFTA states, including Switzerland and Liechtenstein, have collaborated with India to provide improved market access based on specific trade interests and sensitivities related to domestic production. Tariff concessions on both basic and processed agricultural products are expected to enhance market access and promote balanced trade relations between the two regions.
Prime Minister Narendra Modi hailed the signing of the TEPA as a watershed moment in India's economic trajectory. He emphasized the agreement's role in boosting economic progress and creating opportunities for the youth. PM Modi underscored the importance of strengthening bonds with EFTA nations to foster mutual growth and prosperity.
While India has signed similar trade agreements with countries like Australia and the United Arab Emirates in recent years, the TEPA with EFTA holds strategic significance due to the substantial investment commitments and market access it offers. Talks for similar agreements with the United Kingdom, Oman, and the European Union are underway, reflecting India's proactive approach towards expanding its global trade footprint.
India-EFTA Trade & Economic Partnership Agreement signifies a crucial moment in the economic relations between India and the EFTA bloc. As India continues to pursue its ambitious trade agenda, the TEPA stands out as an indication to the country's commitment to leveraging international partnerships for inclusive development and prosperity.
Stronger Ties Inked!
— Piyush Goyal (मोदी का परिवार) (@PiyushGoyal) March 10, 2024
Delighted to sign the India-EFTA Trade & Economic Partnership Agreement, yet another pact of progress for our nation.
This watershed agreement, realised under the guidance & leadership of PM @NarendraModi ji, marks the dawn of a new era of prosperity and… pic.twitter.com/4h6FKoVAIO
