Union Minister of Commerce & Industry Piyush Goyal addresses the media on the signing of the India-EFTA Trade & Economic Partnership Agreement (TEPA) along with his counterparts in New Delhi on March 10, 2024
| Photo Credit: ANI
India signed a free trade pact on March 10 with a group of European nations — Switzerland, Norway, Iceland and Liechtenstein — committing to reduce tariffs, while New Delhi will receive $100 billion in investments over the next 15 years.
India and the members of the European Free Trade Association (EFTA) held 21 rounds of talks over 16 years to clinch the broad-based Trade and Investment Agreement. Here are key facts about the trade pact:
Boost to trade, investment
India expects that the pact, following deals with the UAE and Australia, will boost exports of pharmaceuticals, garments, chemicals and machinery while attracting investments in automobiles, food processing, railways and the financial sector.
India is the EFTA’s fifth-largest trading partner after the European Union, the United States, Britain and China, with total two-way trade touching $25 billion in 2023, its trade ministry estimates. Its exports to the EFTA touched $2.8 billion and imports were about $22 billion during that period. With a population of 13 million and a combined GDP of more than $1 trillion, the EFTA nations are the world’s ninth-largest merchandise trader and its fifth largest in commercial services.
Swiss companies to benefit
Swiss manufacturers of machinery, luxury items like watches and transport are expected to benefit, the Swiss government has said. India has invited Swiss transport companies to invest in the Railways. The pact allows EFTA countries the opportunity to export processed food and beverages, electrical machinery, and other engineering products to a potential market of 1.4 billion people at lower tariffs. The pharmaceutical and medical devices industry within the bloc could also benefit.
India-Swiss relations
India hopes the pact will improve trade ties with Switzerland, the biggest partner in the EFTA. India is its fourth-largest trading partner in Asia and the largest in South Asia.
More than 300 Swiss companies such as Nestle, Holcim, Sulzer, and Novartis, apart from banks such as UBS operate in India, while Indian IT majors TCS, Infosys and HCL work in Switzerland.
No to data exclusivity
India earlier rejected the four nations’ demand for the pact to include provisions on “data exclusivity” that would make it difficult for its drug companies to produce generic variants of the off-patent drugs, Indian officials said. India and the EFTA also agreed to largely keep “sensitive” farm products and gold imports out of the pact.
Limitations of the pact
Switzerland’s policy of tariff-free entry for all industrial goods from any country, with effect from January 1, would affect benefits to Indian companies, Global Trade Research Initiative, a think tank based in New Delhi, said in a report. India is likely to keep facing difficulties in exporting farm produce to Switzerland due to a complex web of tariffs, quality standards, and approval requirements, analysts warned.