India, EFTA Nations Ink Trade Pact for Robust Supply Chains

  • March 18, 2024
  • News

India and the European Free Trade Association (EFTA), which includes Iceland, Liechtenstein, Norway, and Switzerland, signed a historic free trade agreement (FTA). This agreement is expected to foster better-integrated and more resilient supply chains, creating new opportunities for businesses and individuals on both sides.

Notably, this marks the third major trade deal finalised by the Modi government since early 2022. Before this, New Delhi had signed separate bilateral agreements with the United Arab Emirates (UAE) and Australia. Additionally, India is currently engaged in negotiations for significant trade deals with the European Union and the UK, although those are unlikely to be finalized shortly.

Key highlights of the agreement include Investment Commitment: The EFTA states have committed to investing $100 billion in India over the next 15 years. This investment aims to facilitate the creation of one million direct jobs in India. EFTA offers 92.2% of its tariff lines, covering 99.6% of India’s exports. The market access offer includes 100% coverage of non-agricultural products and tariff concessions on Processed Agricultural Products (PAP). India reciprocates by offering 82.7% of its tariff lines, covering 95.3% of EFTA exports, with a significant portion related to gold imports. The trade deal also addresses gender and environmental aspects, reflecting a holistic approach to economic cooperation.

The EFTA states are globally renowned for their leadership in innovation and research and development across various sectors such as digital trade, banking, financial services, transport, logistics, industrial machinery, biotechnology, and pharmaceuticals. Apart from fostering better-integrated and resilient supply chains and creating new opportunities for businesses and individuals, the TEPA is expected to boost trade and investment flows and generate employment.

Swiss Federal Councillor Guy Parmelin, speaking on behalf of the EFTA states at the signing ceremony, highlighted that the agreement will provide market access to a significant growth market for the four countries. He emphasized the aim to diversify and strengthen supply chains while attracting more foreign investment from EFTA to India, ultimately leading to job creation.

The TEPA streamlines market access and simplifies customs procedures, making it easier for businesses in India and EFTA countries to expand their operations in each other’s markets. The agreement also seeks to facilitate and promote investment opportunities between the nations.

Negotiations for the India-EFTA trade deal commenced in January 2008 but stalled after 2013 until they were rekindled last year. According to government data, India’s exports to the EFTA region from January to December 2023 amounted to $1.87 billion, while imports from the non-EU bloc totalled over $20.45 billion. Switzerland alone accounted for $19.65 billion due to gold purchases.

India’s primary imports from these four countries include gold ($20.7 billion in 2021-22), silver, coal, pharmaceuticals, vegetable oil, dairy machinery, medical items, crude oil, and scientific equipment and exports include chemicals, iron and steel, gold, precious stones, yarns, sports goods, glassware and bulk drugs to these nations.