India’s recently concluded the Trade and Economic Partnership Agreement (TEPA) with the European Free Trade Association (EFTA) comprising Iceland, Liechtenstein, Norway, and Switzerland, marking a significant milestone for Indian enterprises and services organizations. This agreement is a result of 15 years of negotiations and holds immense transformative potential for India’s economic landscape. India is the fifth-largest trading partner of EFTA preceded by the European Union, USA, Britain and China. India’s total two-way trade was $25 billion as of 2023.
The FTA grants Indian businesses an unhindered access to EFTA markets, to 92,2% of tariff lines with duty-free access to India's animal products, fish, processed food, and vegetable oils covering 99.6% of India’s exports. India has tabled 105 sub-sectors with commitment of 128 sub-sectors with Switzerland, 114 with Norway, 107 with Liechtenstein, and 110 with Iceland. Switzerland, being the largest trading partner of India followed by Norway, with more than 300 Swiss companies, apart from banks, would enhance Indo-Swiss relationship further. Currently, Indian IT majors have major exports to Switzerland.
India, in turn, has included 82.7% of its tariff lines covering 95.3% of EFTA exports, primarily Gold. The agreement would keep the effective duty on Gold unscathed. The agreement has respected the PLI sensitivity of pharma, medical devices and processed food sub-sectors. Sectors such as dairy, soya, coal and sensitive agricultural products are kept in exclusion list. With an anticipated influx of US$100 billion in investment, Indian companies are poised for an unprecedented global expansion. Moreover, the commitment to creating one million jobs over a 15-year span supports the Indian economy’s growth ambitions.
The TEPA, hence, would allow our manufacturers to access specialized inputs from the EFTA region, it would create a favourable trade ecosystem, and boost made-in-India goods and services exports. TEPA will set the platform to make India a manufacturing services hub for the world, and, thus, give impetus to “Make in India” and “Atmanirbhar Bharat Abhiyan”. India can become the prime sourcing partner to the EFTA region in the sectors of Manufacturing, Machinery, Banking and Financial Services and Insurance, Pharmaceuticals, Chemicals, Infrastructure and Connectivity, Food Processing and Transport and Logistics. The agreement also sets the stage for potential joint ventures among the countries and thus help India diversify imports away from China.
TEPA would also catapult India’s aspirational workforce and create direct jobs and better facilities for vocational and technical training. Technology collaboration and access to cutting-edge technologies in precision engineering, health sciences, renewable energy, Innovation and R&D would further enhance the potential of Indian services sector. Indian companies can look to Switzerland, with 40% of its services exports to EU, as a base for extending its market reach to EU. The agreement would support a simplified VISA process, recognition of professional diplomas and enhanced family access for Indian professionals.
In a nutshell, the TEPA would provide the much-needed boost to Viksit Bharat aspirations, by opening access for Indian exporters and skilled workforce to the large European markets. However, meticulous implementation of the agreement would be paramount to work around increased competition risks and global trade dynamics. That said, the agreement surely has the potential to be a testament to assert India’s position and influence in international collaborations.
A version of this article was published in The Financial Express Online. The same can be read here
Access our latest insights on Apple or Android devices
