India Signs $100bn Free Trade Deal with European EFTA Bloc

India recently signed a free trade agreement with Switzerland, Norway, Iceland, and Liechtenstein. The deal involves reducing tariffs and securing $100 billion in investments for India over the next 15 years. Here are the important details about the agreement:

Boost to Trade and Investments:

India believes that this agreement, along with previous deals with the UAE and Australia, will increase exports of items like pharmaceuticals, garments, chemicals, and machinery. It also aims to attract investments in areas such as automobiles, food processing, railways, and the financial sector.

Trade Relationship with EFTA:

India is the fifth-largest trading partner of the European Free Trade Association (EFTA) after the European Union, the United States, Britain, and China. The total two-way trade between India and EFTA was $25 billion in 2023. India exported $2.8 billion worth of goods to EFTA, while imports amounted to about $22 billion during that period.

Benefits for Swiss Companies:

Swiss manufacturers of machinery, luxury items, and transport are expected to benefit from this agreement. Swiss government encourages its transport companies to invest in Indian railways. The pact allows EFTA nations to export processed food, beverages, electrical machinery, and other engineering products to a potential market of 1.4 billion people at lower tariffs.

India-Swiss Relations:

India aims to strengthen trade ties with Switzerland, its largest partner in EFTA. Over 300 Swiss companies operate in India, including Nestle, Holcim, Sulzer, and Novartis. Indian IT majors like TCS, Infosys, and HCL also have a presence in Switzerland.

Negotiation Challenges:

The negotiations for this pact have taken 16 years, with talks on trade pacts with Britain, the European Union, and other partners running for years. India has been cautious, ensuring it does not compromise the interests of its domestic industries.

Exclusions and Challenges:

India rejected demands for "data exclusivity" that could impact its drug companies. "Sensitive" farm products and gold imports are mostly excluded from the pact. Challenges remain, such as Switzerland's tariff-free entry policy for industrial goods and difficulties in exporting farm produce to Switzerland due to tariffs and quality standards.

In conclusion, this trade deal holds significant promise for both India and the EFTA nations, fostering economic growth and cooperation in various sectors.