All you need to know about India-EFTA free trade agreement

India-EFTA Trade Deal: India recently finalised a free trade agreement with a consortium of European nations - Switzerland, rway, Iceland, and Liechtenstein. This agreement involves a focus on reducing tariffs, along with a substantial $100 billion influx of investments into India over next 15 years.

After prolonged negotiations spanning 21 rounds over a 16-year period, India and members of European Free Trade Association (EFTA) sealed comprehensive Trade and Investment Agreement.

Here are key points of this trade pact:

Ecomic impact

India foresees a table 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 UAE and Australia.

Trade dynamics

India ranks as EFTA's fifth-largest trading partner, with bilateral trade reaching $25 billion in 2023. While Indian exports to EFTA amounted to $2.8 billion, imports stood at approximately $22 billion during same period.

EFTA overview

With a collective population exceeding 13 million and a GDP surpassing $1 trillion, 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 advants. Additionally, Indian railways have extended invitations to Swiss transport companies for investment opportunities.

Favourable sectors

pact opens avenues for EFTA nations to export processed food and bevers, electrical machinery, and or engineering products to a potential market of 1.4 billion people at reduced tariffs. pharmaceutical and medical devices industries within bloc also stand to gain.

India-Swiss relations

India seeks to strengn trade ties with Switzerland, largest partner in EFTA. India ranks as Switzerland's fourth-largest trading partner in Asia and largest in South Asia.

Challenges in negotiations

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 European Union.

Contentious issues

India rejected demands from EFTA nations for provisions on "data exclusivity," which could hinder production of generic drugs by Indian pharmaceutical companies. Additionally, 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)