After 15 years of negotiations, India and the European Free Trade Association (EFTA) have signed a Trade and Economic Partnership Agreement (TEPA). Today, Norway, Switzerland, Iceland, and Liechtenstein are the four non-EU EFTA members. With its promises of job opportunities, economic growth, and improved bilateral relations, the agreement has the potential to be revolutionary for both sides. However, it also offers challenges that must be met to move closer to a more affluent and interconnected global economy.
European Free Trade Association (EFTA)
This intergovernmental organisation was founded to promote free trade and economic integration for the benefit of its four member states (Iceland, Liechtenstein, Norway, and Switzerland) and its trading partners worldwide.
India and EFTA:
- In 2022–2023, India’s exports totalled USD 1.92 billion to EFTA nations, but its imports were USD 16.74 billion.
- 2022–2023, India and EFTA’s bilateral trade was valued at USD 18.65 billion.
- After Switzerland, Norway is India’s second-largest commercial partner.
- India has a trade deficit with Switzerland, primarily due to gold imports.
- India and the European Free Trade Association signed the Trade and Economic Partnership Agreement (TEPA) in March 2024.
Trade and Economic Partnership Agreement (TEPA)
The objective of the TEPA is to reduce or eliminate tariffs and non-tariff barriers on a wide variety of items to facilitate trade and investment between India and the EFTA. Apart from augmenting cooperation concerning the protection and implementation of intellectual property rights, its objective is to provide equitable and lucid circumstances for market entry for investors and service providers. TEPA aims to facilitate trade and customs cooperation while offering effective dispute-resolution processes. The agreement’s fourteen chapters cover trade in products, origin regulations, trade in services, intellectual property rights (IPRs), government procurement, investment promotion and cooperation, technical trade obstacles, and trade facilitation.
Essential Aspects of the Agreement:
- EFTA pledged to encourage investments that would raise the total amount of foreign direct investments in India by USD 100 billion over the next 15 years and facilitate the creation of 1 million direct jobs there.
- A formal promise to support target-oriented investment and job creation is being made for the first time in the history of free trade agreements.
- EFTA’s 92.2% tariff lines cover 99.6% of India’s exports.
- India’s 82.7% tariff lines cover 95.3% of EFTA exports, of which more than 80% are gold imports. The compelling duty on gold remains the same.
- The EFTA’s 100% non-agri product market access offer includes a tariff discount on processed agricultural products (PAP).
- India has acquired commitments in 128 subsectors from Switzerland, 114 from Norway, 107 from Liechtenstein, and 110 from Iceland. India has offered 105 subsectors to the EFTA.
- Mutual Recognition Agreements are covered under TEPA for professionals in fields such as nursing, chartered accounting, architecture, etc.
