New Delhi: The free trade agreement between India and the four-nation European bloc EFTA will come into force from Wednesday under which New Delhi has received an investment commitment of $100 billion in 15 years from the grouping while allowing several products such as Swiss watches, chocolates and cut and polished diamonds at lower or zero duties.
The European Free Trade Association (EFTA) members are Iceland, Liechtenstein, Norway, and Switzerland. It was signed on March 10, 2024.
Domestic customers will get access to high-quality Swiss products such as watches, chocolates, biscuits, and clocks at lower prices as India will phase out customs duties under the trade pact on these goods over 10 years.
The bloc committed an investment of $100 billion — $50 billion within 10 years after the implementation of the agreement and another $50 billion in the next five years - which would facilitate the creation of one million direct jobs in India. This is a first-of-its-kind pledge agreed upon in any of the trade deals signed by India so far.
There is a provision in the pact, officially known as Trade and Economic Partnership Agreement (TEPA), that if the proposed investments would not come because of some reasons, India can re-balance or suspend the duty concessions to the four countries.
India is offering 82.7 per cent of its tariff lines or product categories, which covers 95.3 per cent of EFTA exports of which more than 80 per cent of imports are gold.
Sectors such as dairy, soya, coal and sensitive agricultural products are kept on the exclusion list and there will not be any duty concessions on these goods.
In the services sector, India has offered 105 sub-sectors to the EFTA like accounting, business services, computer services, distribution and health.
On the other hand, the country has secured commitments in 128 sub-sectors from Switzerland, 114 from Norway, 107 from Liechtenstein, and 110 from Iceland.
Segments where Indian services will get a boost include legal, audio-visual, R&D, computer, accounting, and auditing.
Further the pact would provide an opportunity for domestic exporters to integrate into EU (European Union) markets. Over 40 per cent of Switzerland’s global services exports are to the EU. Indian companies can look to Switzerland as a base for extending their market reach to the EU.
Commenting on the pact, Gulzar Didwania, Partner, Deloitte India, said that as the TEPA is now set to come into force, the opportunities available to India align with each member’s strengths.
“Swiss pharma and medical devices can pair India’s high-quality medical eco-system; precision machinery and industrial automation from Switzerland and Liechtenstein can anchor Make in India supply chains; Norway can drive green maritime, offshore wind, digital ports and carbon management; and Iceland’s renewable power and geothermal expertise can underwrite low carbon compute and industrial decarbonisation,” Didwania said.
TEPA was the 14th trade deal that India has signed with individual countries and regional blocs. TEPA is the first trade agreement with developed countries from the Western Hemisphere.
This will be the fifth agreement of the Modi-led government. India signed pacts with Mauritius, the UAE, UK, and Australia. Talks are at an advanced stage with the US, Oman, EU, Chile, New Zealand and Peru for FTAs.
India’s exports to the EFTA bloc rose by 1.22 per cent to $1.97 billion in 2024-25 from $1.94 billion in 2023-24. Imports jumped to $22.44 billion in 2024-25 from $22.05 billion in 2023-24. The two way trade stood at $24.41 billion in the last fiscal. The trade gap is in the favour of the bloc with a $20.47 trade deficit in 2024-25.
The biggest trading partner of India in the bloc is Switzerland (exports $1.47 billion and imports $21.8 billion in 2024-25), which already has zero customs duties on almost all industrial goods.