Representative | Image:Pixabay
India-EFTA Trade Deal: India recently finalised a free trade agreement with a consortium of European nations – Switzerland, Norway, Iceland, and Liechtenstein. This agreement involves a focus on reducing tariffs, along with a substantial $100 billion influx of investments into India over the next 15 years.
After prolonged negotiations spanning 21 rounds over a 16-year period, India and the members of the European Free Trade Association (EFTA) sealed the comprehensive Trade and Investment Agreement.
Here are the key points of this trade pact:
Economic impact
India foresees a notable boost in exports of key sectors such as pharmaceuticals, garments, chemicals, and machinery, alongside increased investments in automobiles, food processing, railways, and finance. This agreement follows similar deals with the UAE and Australia.
Trade dynamics
India ranks as the EFTA’s fifth-largest trading partner, with bilateral trade reaching $25 billion in 2023. While Indian exports to the EFTA amounted to $2.8 billion, imports stood at approximately $22 billion during the same period.
EFTA overview
With a collective population exceeding 13 million and a GDP surpassing $1 trillion, the EFTA member nations rank ninth globally in merchandise trade and fifth in commercial services.
Benefits for swiss manufacturers
Swiss manufacturers, particularly in machinery, luxury items like watches, and transportation, are expected to experience major advantages. Additionally, Indian railways have extended invitations to Swiss transport companies for investment opportunities.
Favourable sectors
The pact opens avenues for EFTA nations to export processed food and beverages, electrical machinery, and other engineering products to a potential market of 1.4 billion people at reduced tariffs. The pharmaceutical and medical devices industries within the bloc also stand to gain.
India-Swiss relations
India seeks to strengthen trade ties with Switzerland, the largest partner in the EFTA. India ranks as Switzerland’s fourth-largest trading partner in Asia and the largest in South Asia.
Challenges in negotiations
The negotiations were complex, with governments cautious about safeguarding domestic industry interests. Talks on trade pacts with various partners have been protracted, including those with Britain and the European Union.
Contentious issues
India rejected demands from the EFTA nations for provisions on “data exclusivity,” which could hinder the production of generic drugs by Indian pharmaceutical companies. Additionally, the pact largely excludes “sensitive” farm products and gold imports.
Limitations
While Switzerland’s tariff-free entry policy for all industrial goods from January 1 may impact benefits on Indian companies, complexities in tariffs, quality standards, and approval requirements could hinder Indian farm produce exports to Switzerland.
(With Reuters Inputs)
