India and EFTA ink $100 billion free trade pact for economic growth

Agreement marks milestone in bilateral relations and job creation

India and the European Free Trade Association (EFTA), comprising Switzerland, Norway, Iceland, and Liechtenstein, have entered a historic free trade pact aimed at bolstering investments and fostering economic growth. The pact, announced on March 10, signals a significant commitment to reducing tariffs and facilitating the flow of capital, with India poised to receive $100 billion in investments over the next 15 years, leading to the creation of one million jobs.

Negotiations for the agreement spanned nearly 16 years, commencing in 2008 and resuming in October 2016 after a hiatus starting in November 2013. The conclusion of 21 rounds of negotiations underscores a shared commitment to promoting targeted investment and job creation through legal frameworks, a first in the realm of free trade agreements.

One of the key advantages of the pact is the phased reduction of customs duties on imported goods, particularly Swiss products such as watches, chocolates, biscuits, and clocks. This move will make high-quality Swiss goods more accessible to Indian consumers at lower prices. Additionally, the agreement includes tariff concessions on various products imported from Switzerland, encompassing seafood, Mediterranean fruits, coffee, oils, sweets, processed foods, and wine, among others.

India has pledged to offer 82.7 percent of its tariff lines, covering 95.3 percent of EFTA exports, with a notable focus on gold imports. While maintaining the effective customs duty on gold at 15 percent, India has reduced the bound rate to 39 percent.

In the services sector, India has extended commitments across 105 sub-sectors to the EFTA, including accounting, business services, computer services, distribution, and health. Conversely, commitments have been secured from EFTA countries across 128 sub-sectors by India.

Key sectors expected to benefit from the trade pact include legal, audio-visual, research and development, computer, accounting, and auditing services. The Trade and Economic Partnership Agreement (TEPA) is anticipated to stimulate Indian services exports, particularly in IT services, business services, personal, cultural, sporting and recreational services, education services, and audio-visual services.

Indian Prime Minister Narendra Modi hailed the agreement as a “watershed moment,” stressing a collective commitment to fostering open, fair, and equitable trade practices. He underscored the global leadership of EFTA countries in innovation and research across various sectors, which is poised to facilitate collaboration and investment in digital trade, banking and financial services, transport and logistics, industrial machinery, biotechnology, pharmaceuticals, chemicals, food processing, and clean energy.