On Sunday, March 10, 2024, India and the four-nation European Free Trade Association (EFTA) will sign a trade deal that aims to boost two-way trade in goods, services and investments¹ ^,2,³. The EFTA members are Iceland, Liechtenstein, Norway and Switzerland.

The trade deal, officially called the India-EFTA Trade and Economic Partnership Agreement (TEPA), has been under negotiation since 2008, but was stalled for several years until it resumed in 2023⁴ ^,5.

🚨 India likely to sign trade deal with EFTA consisting of four european countries, Switzerland, Iceland, Norway and Liechtenstein tomorrow. pic.twitter.com/eEYMI5rl01
— Indian Tech & Infra (@IndianTechGuide) March 9, 2024

What would you like to read? Choose

What are the benefits of the TEPA for India?

The TEPA is expected to bring several benefits for India, such as:

Increased market access: The EFTA countries have offered duty-free market access for India’s animal products, fish, processed food, and vegetable oils¹. India will also gain access to the European Economic Area (EEA), which comprises the EU and the EFTA countries, through the TEPA⁶.
Enhanced investments: The EFTA countries have committed to invest $100 billion in India over the next 15 years in sectors such as pharma, food processing, engineering and chemicals⁴ ^,5. This is the first time that an FTA has included an investment commitment, which will be linked to the level of tariff reduction⁴. The EFTA countries have large sovereign wealth funds, such as Norway’s $1.6-trillion fund, which can provide long-term capital for India’s development⁵.
Improved intellectual property rights: India and the EFTA countries have agreed to cooperate on intellectual property rights (IPR) issues, such as patent protection, data exclusivity and geographical indications⁴ ^,5. India has not conceded to the demands of the Swiss pharma companies for a more lenient patent regime, but has agreed to discuss specific patent-related issues⁴.

What are the challenges of the TEPA for India?

The TEPA also poses some challenges for India, such as:

Competition from EFTA products: India will have to reduce tariffs on some products from the EFTA countries, such as watches, wine, chocolates and machinery⁴. This could affect the domestic industries that produce similar products, especially the small and medium enterprises (SMEs). India will also have to lower the bound rate of duty on gold from 40% to 39%, while maintaining the effective duty at 15%⁴. This could increase the imports of gold from Switzerland, which is already the largest source of gold for India.
Compliance with EFTA standards: India will have to adhere to the high standards of quality, safety and environmental protection that the EFTA countries follow⁶. This could require upgrading the infrastructure, technology and skills of the Indian exporters, especially in the agricultural and food sectors. India will also have to harmonize its regulations and certifications with those of the EFTA countries, which could entail additional costs and procedures⁶.
Balancing other trade deals: India is also pursuing other trade deals with countries such as the UK, the EU, Australia, Oman, UAE and Canada⁴ ^,5. India will have to balance its interests and priorities across these deals, and ensure that there is no conflict or overlap between them. India will also have to address the concerns of its domestic stakeholders, such as farmers, traders, consumers and civil society groups, who may have different views on the trade deals.

What are the implications of the TEPA for India’s foreign policy?

The TEPA is not only a trade deal, but also a strategic partnership between India and the EFTA countries. The TEPA has implications for India’s foreign policy, such as:

Strengthening ties with Europe: The TEPA will enhance India’s economic and political relations with Europe, which is an important partner for India in terms of trade, investment, technology, education, culture and security. The TEPA will also complement India’s existing trade deals with the EU and the UK, and help India diversify its trade portfolio and reduce its dependence on any single market.
Promoting multilateralism and rules-based order: The TEPA will demonstrate India’s commitment to multilateralism and a rules-based order in the global trade system, which is facing challenges from protectionism, unilateralism and regionalism. The TEPA will also support India’s bid for a permanent seat in the UN Security Council, as the EFTA countries are supportive of India’s candidature.
Advancing common interests and values: The TEPA will enable India and the EFTA countries to advance their common interests and values, such as democracy, human rights, rule of law, peace and stability, climate change, sustainable development and counter-terrorism. The TEPA will also facilitate cooperation and dialogue between India and the EFTA countries on regional and global issues of mutual concern, such as the Indo-Pacific, Afghanistan, Iran, Africa and the Arctic.

Conclusion

The TEPA is a landmark trade deal that will boost India’s trade, investment and strategic ties with the EFTA countries. The TEPA will also enhance India’s role and influence in the global trade system and the international arena.

However, the TEPA also poses some challenges and risks for India, which will have to be addressed and mitigated. The TEPA will require effective implementation and monitoring, as well as regular review and consultation, to ensure that it delivers the desired outcomes and benefits for both sides.

The TEPA will also require coordination and cooperation with other trade partners and stakeholders, to ensure that it is compatible and consistent with India’s broader interests and objectives. The TEPA is a significant step forward for India’s trade policy and foreign policy, and a win-win proposition for India and the EFTA countries.

Print 🖨 PDF 📄