Hindustan Times - 20 July 2025
India-EFTA free trade pact to roll out from Oct 1
India and EFTA nations signed TEPA on March 10 signed the free trade deal with a “binding” commitment from the bloc for infusion of direct investments of $100 billion in 15 years to create 1 million jobs.
The free trade agreement between India and the European Free Trade Association (EFTA), which also promises infusion of $100 billion direct investments in the country from the bloc’s four members — Iceland, Liechtenstein, Norway and Switzerland – will be operational from October 1, Union commerce minister Piyush Goyal said on Saturday.
"All the four countries [of EFTA] have ratified the FTA,” the minister said at a function of the Associated Chambers of Commerce and Industry of India (ASSOCHAM) in Mumbai. The EFTA members have already submitted their documents with the repository, which is Norway, he said, adding that the Trade and Economic Partnership Agreement (TEPA) between India and the European bloc will come into effect.
India and EFTA nations signed TEPA on March 10 signed the free trade deal with a “binding” commitment from the bloc for infusion of direct investments of $100 billion in 15 years to create 1 million jobs. EFTA is an inter-governmental organisation set up in 1960 for the promotion of free trade and economic integration for the benefit of its four member states.
Under the deal, EFTA is offering 92.2% of its tariff lines which covers 99.6% of India’s exports. The EFTA’s market access offer covers 100% of non-agri products and tariff concession on processed agricultural products (PAP).
In return, India is offering 82.7% of its tariff lines which covers 95.3% of EFTA exports of which more than 80% import is gold. “The effective duty on gold remains untouched. Sensitivity related to PLI in sectors such as pharma, medical devices and processed food etc have been taken while extending offers. Sectors such as dairy, soya, coal and sensitive agricultural products are kept in exclusion list,” the commerce ministry said in a statement after signing of the deal.
The deal will allow duty-free exports of merchandise such as rice. It will, however, ease imports of high-value wine, chocolates and watches from these countries. Besides, TEPA would stimulate India’s services exports such as IT services, business services, personal, cultural, sporting and recreational services, education services and audio-visual services.
“For the first ever time in the history of FTAs, a legal commitment is being made about promoting target-oriented investment and creation of jobs,” the statement said, adding that the investments do not cover foreign portfolio investment. The European bloc is looking at FDI opportunities in India’s growing sectors such as digital trade, banking, financial services, transport, logistics, industrial machinery, bio technology, pharmaceuticals, chemicals, food processing and clean energy.
The deal will make Swiss chocolates and watches of famous brands such as Rolex, Omega, and Cartier cheaper for Indian consumers. India is giving duty concessions on watches, chocolates and wine, but wine costing below $5 will not enjoy duty concessions to protect local wine manufacturers, a government official said, requesting anonymity. Both basmati and non-basmati rice from India will get duty concession in EFTA countries, without any reciprocity, he added.
The figure of $100 billion FDI inflow from the bloc — $50 billion in the first 10 years and the other $50 billion in the next five years – is arrived at after thoroughly considering all economic factors, and India can withdraw tariff concessions in case EFTA fails to meet the commitment, the official said. “Hence, it is a legally binding commitment and part of the deal,” he added.
“The agreement, however, excludes sovereign wealth funds from the FDI promotion obligations, but investments of an EFTA entity routed through other countries will also be counted in the $!00 billion obligation,” he said. The agreement envisages that India will also create an environment conducive to increased investment flows and technology collaboration, which excludes technology transfer.
The pact comprises 14 chapters, focusing on subjects such as market access for goods and services, rules of origin, trade facilitation, trade remedies, investment promotion, intellectual property rights and trade and sustainable development.
While negotiating the FTA, both sides acknowledged and respected each other’s sensitives, particularly on agriculture, he said. Hence, sectors such as dairy, soya, coal and sensitive agricultural products are kept in the exclusion list. India’s interests in generic medicines and concerns related to evergreening of patents have been fully addressed, he added.
The FTA also has provisions for mutual recognition agreements (MRAs) in professional services such as nursing, chartered accountants and architects, which will enable these professionals to work in EFTA countries, he said.
Talks on the India-EFTA trade deal began in January 2008 but remained dormant after 2013, until the negotiations were revived in 2023. India’s key imports from the four countries are gold ($20.7 billion in 2021-22), silver, coal, pharmaceuticals, vegetable oil, dairy machinery, medical items, crude and scientific equipment. It exports chemicals, iron and steel, gold, precious stones, yarns, sports goods, glassware and bulk drugs to these nations.