India Signs Free Trade Agreement with EFTA Bloc

March 11, 2024

Recently, India signed a landmark free trade agreement (FTA) with the European Free Trade Association (EFTA), a bloc consisting of Switzerland, Norway, Liechtenstein, and Iceland. The Trade and Economic Partnership Agreement (TEPA) is expected to boost economic growth, create job opportunities, and attract significant foreign investment to India.

EFTA is an inter-governmental group aimed to promote and intensify free trade. It serves as an alternative for states that did not wish to join the European Union (EU). EFTA countries are not part of the EU, and India is negotiating a separate comprehensive free trade agreement with the 27-nation bloc.

Key Highlights of the Agreement

Investment Commitment: As part of the agreement, EFTA countries have committed to investing $100 billion in India over the next 15 years, which is expected to create one million jobs in the country.
Tariff Reductions and Market Access: The TEPA will lead to substantial tariff reductions, increase market access, and simplify customs procedures between India and the EFTA countries.
Human Rights and Sustainable Development: For the first time, an FTA signed by EFTA includes a chapter on commitments to human rights and sustainable development.
Comprehensive Coverage: The agreement has 14 chapters, covering 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.

Benefits for EFTA Countries

EFTA countries will gain access to a major growth market in India, allowing their companies to diversify and strengthen their supply chains. The agreement is expected to create additional opportunities for both India and the EFTA states by making better use of their economic potential.

India’s Perspective

Commerce and Industry Minister Piyush Goyal described the signing as a “watershed moment,” as it is India’s first modern trade pact with a bloc of developed countries. The agreement is expected to attract more foreign investment from EFTA, which will ultimately lead to the creation of good jobs in India.

Negotiation History

India and EFTA have been negotiating the TEPA since January 2008, with 13 rounds of talks held until November 2013 before negotiations were put on hold. Both sides resumed negotiations in October 2023 and concluded them in a fast-track mode.

Trade Statistics

India-EFTA two-way trade stood at $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 year, with Switzerland being the largest trading partner of India, followed by Norway, within the EFTA bloc.

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