India Signs Landmark Trade Pact with EFTA: Tariffs to Drop, Investments to Rise

India has achieved a significant breakthrough in its international trade relations with the European Free Trade Association (EFTA), comprising Iceland, Liechtenstein, Norway, and Switzerland. The two parties have inked a Trade and Economic Participation Agreement (TEPA), aimed at bolstering trade and investment opportunities. This pact, hailed as innovative and well-balanced, underscores a commitment to shared prosperity and a desire to foster a stronger partnership between India and EFTA.

Prime Minister's Remarks

Prime Minister Narendra Modi expressed his satisfaction with the agreement, highlighting its significance in advancing the developmental aspirations of both India and EFTA. He praised the TEPA as one of the most pioneering free trade agreements ever concluded between the nations, emphasizing its potential to enhance inclusivity and prosperity for their respective populations.

Trade Dynamics

India's trade deficit with EFTA nations has been a longstanding concern, prompting efforts to mitigate tariffs and facilitate fairer pricing for Indian consumers. In the fiscal year 2022-23, bilateral trade between India and EFTA stood at $18.65 billion, with India grappling with a trade deficit of $14.8 billion. Notably, the total trade volume between the two blocs witnessed a decline from $27.23 billion in the previous fiscal year.

Tariff Reductions and Impact

Following the conclusion of the India-EFTA TEPA, significant reductions in tariffs are anticipated, particularly on a wide array of industrial goods. Products such as Swiss watches, pharmaceuticals, fertilizers, chocolates, minerals, textiles, smartphones, iron, and steel items are expected to witness duty eliminations. Switzerland, constituting 91% of India-EFTA trade, faces notable tariff barriers, including a 20% import duty on Swiss watches and a 30% duty on chocolates from European countries.

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Areas of Cooperation

The Government of India has underscored its eagerness to collaborate with EFTA nations across various sectors, including research and development, banking and financial services, digital trade, biotechnology, clean energy, and food processing industries. This broad spectrum of cooperation reflects a shared commitment to fostering innovation, sustainability, and economic growth.

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