India-EFTA trade pact marks a ‘watershed moment’ opening huge economic opportunities: PM Modi

The India-EFTA Trade and Economic Partnership Agreement (TEPA), signed on March 10, with a committed $100-billion investments into India from the four-member bloc over 15 years creating an estimated 1 million jobs, marks a “watershed moment” in bilateral relationship opening up enormous trading and investment opportunities, Prime Minister Narendra Modi has said.

The EFTA countries, which include Switzerland, Iceland, Norway and Liechtenstein, will benefit from elimination or reduction of import duties by India on a large number of industrial goods, which include pharmaceutical products, machinery, watches, fertilizers, medicines, chemical products, minerals and fish, per the agreement. Market access will also be provided for some agricultural goods, based on specific interests.

• Also read: India-EFTA pact: India to phase out import duties on chocolates, watches, textiles, smartphones

Exclusion list

However, sectors such as dairy, soya, coal and sensitive agricultural products have been kept in the exclusion list, which means there won’t be any tariff cuts by India for these, the government said.

“EFTA countries gain market access to a major growth market. Our companies will strive to diversify their supply chains while rendering them more resilient. India, in return, will attract more foreign investment from EFTA, which will ultimately translate into an increase in good jobs,” said Swiss Federal Councillor Guy Parmelin at the signing ceremony of the India-EFTA TEPA in New Delhi on Sunday, speaking on behalf of the EFTA Member States.

India already enjoys duty free market access for most of its industrial goods in EFTA countries, particularly Switzerland, which accounts for over 70 per cent of India’s exports to the bloc. In agriculture, it has been offered improved market access based on specific trade interests.

• Also Read: India’s gains from trade pact with European trade association to come from promised investments, not tariff cuts: Research body

With its imports from EFTA countries at $20.45 billion (the bulk of it comprising gold from Switzerland), and exports at only $1.87 billion, India had a huge trade deficit of $18.58 billion with the bloc in CY2023. 

“The trade agreement symbolises our shared commitment to open, fair, equitable trade, as well as generating growth and employment for the youth,” Modi said in his statement read by Commerce & Industry Minister Piyush Goyal at the signing ceremony.

Commitment from TEPA countries to invest $100 billion in India over 15 years was a unique one, Goyal pointed out. “It is for the first time in the history of the world that we are inking an FTA with a binding commitment to invest $100 billion in India from EFTA countries,” he said.

In case, the EFTA countries do not fulfill the defined investment target after 15 years, India may, after a further grace period of three years, suspend concessions in a proportionate and temporary manner, the agreement states, indicating a substantial time lag.

• Also Read: India, EFTA bloc likely to sign free trade pact on March 10

Biz opportunity

The TEPA provided a big opportunity for businesses from sectors such as pharmaceuticals, medical devices, food, R&D and many more, Goyal added.

The pact is also expected to stimulate India’s services exports in sectors such as IT services, business services, personal, cultural, sporting and recreational services, other education services, audio-visual services, per a government statement.

The EFTA-India TEPA was signed by Goyal, Swiss Federal Councillor Guy Parmelin, Iceland Foreign Affairs Minister Bjarni Benediktsson, Liechtenstein Foreign Affairs Minister Dominique Hasler and Norwegian Minister of Trade and Industry Jan Christian Vestre.

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