India Switzerland EFTA Mega Deal

The India-EFTA Trade and Economic Partnership Agreement (TEPA) is a landmark free trade agreement signed between India and the European Free Trade Association (EFTA), comprising Switzerland, Norway, Iceland, and Liechtenstein. After nearly 16 years of negotiations, the agreement is set to take effect on October 1, 2025, following Switzerland’s final ratification.

What Is EFTA?

• EFTA is a regional trade organization of four European countries that are not part of the European Union.
• Members: Switzerland, Norway, Iceland, Liechtenstein
• Purpose: Promote free trade and economic integration among member states and with other countries.

Key aspects of the agreement

The TEPA encompasses 14 chapters, focusing on crucial areas like trade in goods, services, investment promotion, intellectual property rights, and sustainable development. A notable feature of the deal is a binding commitment from the EFTA states to invest USD 100 billion in India over the next 15 years, aiming to generate 1 million direct jobs in India. This commitment, unprecedented in the history of FTAs, highlights the potential impact of the agreement on India's economic growth and employment generation.

Benefits for India

• Investment boost: The USD 100 billion investment commitment from EFTA countries is expected to fuel infrastructure development, technological advancement, and job creation across various sectors like manufacturing, pharmaceuticals, chemicals, and food processing.
• Enhanced market access: India gains access to the markets of EFTA countries, particularly for its organic chemicals, pharmaceuticals, and food processing industries. The agreement eliminates or reduces tariffs on a significant portion of Indian exports to EFTA nations.
• Services sector growth: India's service exports, including IT services, business services, and other professional services, are poised for a boost with improved market access and commitments from EFTA nations, according to Invest India. The pact also facilitates the movement of skilled professionals and aims to streamline customs procedures.
• Technological collaboration: The TEPA fosters technology collaboration and access to world-leading technologies, benefiting sectors like precision engineering, health sciences, and renewable energy.
• Gateway to EU markets: Given Switzerland's extensive service exports to the EU, the deal could position India to leverage Switzerland as a platform for expanding its market reach within the EU, according to EY.

Challenges and considerations

• Agricultural sector exemptions: India has excluded sensitive agricultural and dairy products from significant tariff concessions, potentially limiting benefits for some EFTA exporters.
• Existing trade deficit: India currently has a trade deficit with the EFTA bloc, significantly driven by gold imports from Switzerland.
• Non-tariff barriers: Addressing non-tariff barriers, such as differing product standards and technical regulations, is crucial for smooth trade flows.
• Intellectual property rights: While the agreement aligns with TRIPS standards, ensuring fair and balanced IPR provisions, especially concerning generic drugs and data exclusivity, is important.

Way forward

The India-EFTA trade deal represents a promising step towards a more interconnected and prosperous future. To ensure its success and maximize its potential benefits, both sides must focus on:

• Investment protection: Incorporating robust investment protection provisions and effective dispute resolution mechanisms will create a more stable environment for businesses.
• Bridging the regulatory gap: Efforts to streamline non-tariff barriers and establish Mutual Recognition Agreements will facilitate smoother trade flows.
• Building capacity: Investing in training and skill development, as well as upgrading customs infrastructure, will ensure efficient implementation of the agreement.
• Fostering collaboration: Regular dialogues between governments, businesses, and civil society, coupled with knowledge-sharing programs, will promote a shared vision for a thriving economic partnership.

With proactive measures and a collaborative approach, the India-EFTA trade deal has the potential to be a game-changer, fostering economic growth, generating employment, and solidifying India's position as a key player in the global trade arena.