India-EFTA trade deal with European nations comes into effect

India and EU members during a ceremony. PIC/X@IndiainSwiss

India's free trade agreement (FTA) with four European nation bloc European Free Trade Association (EFTA) has come into effect from October 1. It is aimed at boosting two-way commerce and investments. The EFTA members are Iceland, Liechtenstein, Norway, and Switzerland. It was signed on March 10, 2024.

Under the pact, India has received an investment commitment of $100 billion in 15 years from the group. Concurrently, the EFTA nations will aim to facilitate the generation of 1 million direct jobs in India resulting from these investment inflows. This investment commitment explicitly excludes foreign portfolio investment (FPI), focusing on long-term capital for productive capacity building.

India will have the option of temporarily withdrawing customs duty concessions on EFTA countries under the agreement. Though the investments have to flow in 15 years - $50 billion in the first 10 years (counted after implementation of the pact) and another $5 billion in the next five years, the trade deal also provides for a three-year grace period to meet the obligations.

The bloc has offered 92.2 per cent of tariff lines or product categories encompassing 99.6 per cent of India's exports. It also includes 100 per cent of non-agricultural products and tariff concessions on processed agri products. On the other hand, India's offer to EFTA covers 82.7 per cent of tariff lines, accounting for 95.3 per cent of EFTA exports. Over 80 per cent of these imports are gold (from Switzerland), with no change in effective duty on gold.

The sectors under the agreement include pharma, medical devices, processed food, dairy, soya, coal, and sensitive agricultural products. Indian exporters in sectors like machinery, organic chemicals, textiles, leather, gems and jewellery, and processed foods will enjoy duty concessions. This will enhance competitiveness, reduce compliance costs and accelerate access to the EFTA market.

India has offered commitments in 105 sub-sectors to the EFTA while securing enhanced access in 128 sub-sectors from Switzerland, 114 from Norway, 107 from Liechtenstein, and 110 from Iceland. FTAs signed by India so far: India has inked trade deals with Sri Lanka, Bhutan, Thailand, Singapore, Malaysia, Korea, Japan, Australia, the UAE, the UK, Mauritius, and the 10-nation bloc ASEAN (Association of Southeast Asian Nations).

Since 2014, the country has signed five trade pacts with Mauritius, the UAE, Australia, EFTA and the UK. In total, India has inked 16 such pacts so far. In addition, India is negotiating trade agreements with a number of its trading partners, such as the US, Oman, the European Union (EU), Peru, Chile, New Zealand and Israel.

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