Trade pact with EFTA may be the first for India with committed investments, jobs, says official

The proposed free trade agreement between India and the European Free Trade Association (EFTA) countries, with a commitment of $100-billion investments from the four-country bloc into India over the next 15 years generating an estimated 1 million jobs, may be formalised soon as the pact “is ready” and going through legal scrutiny, sources have said.

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“This is the first FTA for India where it has been able to get a commitment on investment and employment from the partner nations. The EFTA countries are looking at investing in joint ventures in areas such as pharmaceuticals, especially medical devices, certain chemicals, food processing and engineering products,” an official tracking the matter told businessline.

Free trade pact

EFTA countries, which include Switzerland, Finland, Norway and Leichtenstein, re-started their negotiations for a free trade pact with India, formally called a broad-based Trade and Investment Agreement, in October 2016. The various chapters contained in the proposed pact include trade in goods, rules of origin, trade in services, investment promotion & cooperation, trade & sustainable development, and customs & trade facilitation.

The promised investments that will flow into India from the EFTA countries is likely to be made from their provident funds, the official said. The JV areas that the countries have short-listed mainly include areas where there is no competition from India. “EFTA has agreed to the condition of investments being made in India because they are getting market access. Also, they are not our competitors in the identified sectors. For instance, in India most of the medical devices are being imported from China. The pact will lead to diversification of imports which is absolutely necessary,” the official added.

Exports to EFTA

India’s exports to the EFTA bloc in 2023 (calendar year) were at $1.87 billion, with items such as chemicals, pharmaceuticals, apparel and pearls, precious & semi-precious stones, dominating the export basked. 

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On the other hand, it imported goods worth $20.45 billion from the EFTA countries in 2023 with inflows of pearls, precious or semi-precious stones, precious metals, and coins valued at $16.7 billion.

A senior government official had earlier clarified that India will not go against the interests of its generic drugs industry in any of the Free Trade Agreements (FTA) it is negotiating with its partner countries, and had rejected the demand for `data exclusivity’ provision in the free trade pact with the EFTA bloc.

“There is a likelihood that the free trade pact between India and the EFTA can be formalised before the Indian elections are announced as all the ground work has been done,” the official said.

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