Union Minister of Commerce & Industry Piyush Goyal addresses the media on the signing of the India-EFTA Trade & Economic Partnership Agreement (TEPA) along with his counterparts in New Delhi on March 10, 2024
| Photo Credit: ANI

India signed a free trade pact on March 10 with a group of European nations — Switzerland, Norway, Iceland and Liechtenstein — committing to reduce tariffs, while New Delhi will receive $100 billion in investments over the next 15 years.

India and the members of the European Free Trade Association (EFTA) held 21 rounds of talks over 16 years to clinch the broad-based Trade and Investment Agreement. Here are key facts about the trade pact:

Boost to trade, investment

India expects that the pact, following deals with the UAE and Australia, will boost exports of pharmaceuticals, garments, chemicals and machinery while attracting investments in automobiles, food processing, railways and the financial sector.

India is the EFTA’s fifth-largest trading partner after the European Union, the United States, Britain and China, with total two-way trade touching $25 billion in 2023, its trade ministry estimates. Its exports to the EFTA touched $2.8 billion and imports were about $22 billion during that period. With a population of 13 million and a combined GDP of more than $1 trillion, the EFTA nations are the world’s ninth-largest merchandise trader and its fifth largest in commercial services.

Swiss companies to benefit

Swiss manufacturers of machinery, luxury items like watches and transport are expected to benefit, the Swiss government has said. India has invited Swiss transport companies to invest in the Railways. The pact allows EFTA countries the opportunity to export processed food and beverages, electrical machinery, and other engineering products to a potential market of 1.4 billion people at lower tariffs. The pharmaceutical and medical devices industry within the bloc could also benefit.

India-Swiss relations

India hopes the pact will improve trade ties with Switzerland, the biggest partner in the EFTA. India is its fourth-largest trading partner in Asia and the largest in South Asia.

More than 300 Swiss companies such as Nestle, Holcim, Sulzer, and Novartis, apart from banks such as UBS operate in India, while Indian IT majors TCS, Infosys and HCL work in Switzerland.

No to data exclusivity

India earlier rejected the four nations’ demand for the pact to include provisions on “data exclusivity” that would make it difficult for its drug companies to produce generic variants of the off-patent drugs, Indian officials said. India and the EFTA also agreed to largely keep “sensitive” farm products and gold imports out of the pact.

Limitations of the pact

Switzerland’s policy of tariff-free entry for all industrial goods from any country, with effect from January 1, would affect benefits to Indian companies, Global Trade Research Initiative, a think tank based in New Delhi, said in a report. India is likely to keep facing difficulties in exporting farm produce to Switzerland due to a complex web of tariffs, quality standards, and approval requirements, analysts warned.

India and the four-nation European bloc EFTA ink free trade agreement on Sunday, March 10, 2024.
| Photo Credit: X@ANI

India and the four-nation European bloc EFTA on March 10 signed a free trade agreement to promote investments and boost two-way trade in goods and services.

The European Free Trade Association (EFTA) members are Iceland, Liechtenstein, Norway, and Switzerland.

The agreement has 14 chapters, including trade in goods, rules of origin, intellectual property rights (IPRs), trade in services, investment promotion and cooperation, government procurement, technical barriers to trade and trade facilitation.

“EFTA countries gain market access to a major growth market. Our companies 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…All in all, the TEPA will allow us to make better use of our economic potential and create additional opportunities for both India and the EFTA States,” Federal Councillor Guy Parmelin, speaking on behalf of the EFTA Member States, said.

Under free trade pacts, two trading partners significantly reduce or eliminate customs duties on the maximum number of goods traded between them, besides easing norms to promote trade in services and investments.

India and EFTA have been negotiating the pact, officially dubbed the Trade and Economic Partnership Agreement (TEPA), since January 2008. Thirteen rounds of talks were held till November 2013 before negotiations were put on hold.

Both sides resumed the negotiations in October 2023 and concluded it in a fast-track mode.

EFTA countries are not part of the European Union (EU). It is an inter-governmental organisation for the promotion and intensification of free trade. It was founded as an alternative for states that did not wish to join the European community.

India is negotiating a comprehensive free trade agreement separately with the EU, the 27-nation bloc.

India had earlier used the strategy of expediting or fast-tracking FTA negotiations successfully with the UAE and Australia.

India-EFTA two-way trade was $18.65 billion in 2022-23 compared to $27.23 billion in 2021-22. The trade deficit was $14.8 billion in the last fiscal.

Switzerland is the largest trading partner of India followed by Norway in the bloc.

‘It symbolises shared commitment to fair, equitable trade’

Prime Minister Narendra Modi said the India-EFTA trade agreement symbolises our shared commitment to open, fair and equitable trade.

He also said that the global leadership of EFTA countries in innovation and R&D across diverse spheres like digital trade, banking and financial services, and pharma will open up new doors of collaboration.

“Heartiest Congratulations and best wishes to the negotiators and signatories involved in the signing of India-EFTA Trade and Economic Partnership Agreement (TEPA),” Mr. Modi said in a written message.

The Prime Minister’s statement was read by Commerce and Industry Minister Piyush Goyal here in the presence of ministers and officials of EFTA countries.

“In the last 10 years, India’s economy has taken a quantum leap, moving from being the world’s eleventh largest economy to the fifth largest. Our next goal is to make India’s economy in the world,” the Prime Minister said.

Piyush Goyal, Minister of Commerce & Industry. File.
| Photo Credit: Kamal Narang

Union Commerce, Industry and Textiles Minister Piyush Goyal is heading for a two-day visit to London, starting Monday, to take forward negotiations for bilateral trade pacts with the United Kingdom and the four-nation European Free Trade Association (EFTA) bloc.

Mr. Goyal will engage in high-level meetings with his U.K. counterparts, including the Secretary of State for International Trade, as well as representatives from various sectors and industries. U.K.’s Minister for International Trade Nigel Huddleston said last week that half of the chapters in the proposed bilateral trade agreement had been worked out and concluded already.

“These meetings will provide an opportunity to discuss the key priorities and objectives of the Free Trade Agreement [FTA] negotiations, with a focus on addressing trade barriers, promoting investments, and fostering greater cooperation in areas such as technology, innovation, and intellectual property rights,” the Commerce Ministry said in a statement.

Meetings are also scheduled with ministers from the EFTA member-countries — Switzerland, Norway, Iceland, and Liechtenstein — to assess the progress made in the ongoing negotiations of a Trade and Economic Partnership Agreement (TEPA). The pact will strive to enhance trade and economic cooperation between India and the EFTA member-countries, fostering an environment conducive to increased investments, reduced trade barriers, and greater market access.