India-EFTA trade pact comes into force

New Delhi, Oct 1 (PTI) The free trade agreement between India and the four-nation European bloc EFTA came into force on Wednesday, under which the country has received an investment commitment of USD 100 billion over 15 years, while lowering or removing duties on products like Swiss watches and chocolates.

The European Free Trade Association (EFTA) members are Iceland, Liechtenstein, Norway, and Switzerland. It was signed on March 10, 2024.

Commerce and Industry Minister Piyush Goyal said the pact will unlock new opportunities for trade, investment and job creation, benefiting people and businesses.

"Truly a historic day, as the India-EFTA Trade and Economic Partnership Agreement (TEPA) comes into force," he said in a post on X.

Together, India and the EFTA states represent a combined GDP of about USD 5.4 trillion, providing the scale for deeper integration.

"The entry into force of the TEPA is a concrete step towards deepening the relationships between the EFTA states and India, building bridges and encouraging trade and investment," a joint communique said.

It provides enhanced market access and streamlines customs procedures, making it easier for Indian and EFTA businesses to expand their operations into growing markets, it added.

Domestic customers will get access to high-quality Swiss products, such as watches, chocolates, biscuits, and clocks, at lower prices, as India will phase out customs duties under the trade pact on these goods over 10 years.

The bloc committed an investment of USD 100 billion -- USD 50 billion within 10 years after the implementation of the agreement and another USD 50 billion in the next five years -- which would facilitate the creation of one million direct jobs in India.

This is a first-of-its-kind pledge agreed upon in any of the trade deals signed by India so far.

There is a provision in the pact, officially known as the Trade and Economic Partnership Agreement (TEPA), that if the proposed investments do not come because of certain reasons, India can rebalance or suspend the duty concessions to the four countries.

Under the pact, India is offering 82.7 per cent of its tariff lines or product categories, covering 95.3 per cent of EFTA exports, of which more than 80 per cent of imports are gold.

Sectors such as dairy, soya, coal and sensitive agricultural products are kept on the exclusion list, and there will not be any duty concessions on these goods.

In the services sector, India has offered 105 sub-sectors to the EFTA, like accounting, business services, computer services, distribution and health.

On the other hand, the country has secured commitments in 128 sub-sectors from Switzerland, 114 from Norway, 107 from Liechtenstein, and 110 from Iceland.

This is the fifth agreement of the Modi-led government. India signed pacts with Mauritius, the UAE, the UK, and Australia. Talks are at an advanced stage with the US, Oman, EU, Chile, New Zealand and Peru for FTAs.

India's exports to the EFTA bloc rose by 1.22 per cent to USD 1.97 billion in 2024-25 from USD 1.94 billion in 2023-24.

Imports jumped to USD 22.44 billion in 2024-25 from USD 22.05 billion in 2023-24.

The two-way trade stood at USD 24.41 billion in the last fiscal. The trade gap is in favour of the bloc with a USD 20.47 trade deficit in 2024-25.

The biggest trading partner of India in the bloc is Switzerland (exports USD 1.47 billion and imports USD 21.8 billion in 2024-25), which already has zero customs duties on almost all industrial goods.

India has low trade volumes with the remaining three countries - Iceland (exports USD 66 million and imports USD 11 million in 2024-25), Liechtenstein (exports USD 0.41 million and imports USD 1.82 million in 2024-25), and Norway (exports USD 425 million and imports USD 632.8 million in 2024-25).

India has received USD 10.87 billion foreign direct investment (FDI) from Switzerland during April 2000 and June 2025. It was USD 54.07 million from Iceland, USD 110.26 million from Liechtenstein, and USD 941.81 million from Norway.

EFTA countries are not part of the European Union (EU). It is an intergovernmental organisation for the promotion and intensification of free trade. It was founded as an alternative for states that did not wish to join the European Community.

India is negotiating a comprehensive free trade agreement separately with the EU, the 27-nation bloc. PTI RR BAL BAL