India Signs Trade Pact with EFTA, Aiming for $100 Billion Investment

India took a significant stride in its economic agenda as it inked a Trade and Economic Partnership Agreement (TEPA) with the European Free Trade Association (EFTA), comprising Iceland, Liechtenstein, Norway, and Switzerland, on March 10. The agreement marks a milestone in India's trade relations, with the EFTA nations committing to facilitate a substantial investment of $100 billion in India over the next 15 years.

Key Investment Commitment

According to the terms of the agreement, the EFTA countries have pledged to support private companies in investing $100 billion in various sectors within India. Notably, this investment is anticipated to bolster industries such as pharmaceuticals, medical devices, and food sectors, heralding significant opportunities for economic growth.

Remarks from Indian Officials

India's Commerce Minister, Piyush Goyal, hailed the agreement as a momentous opportunity for economic collaboration, emphasizing its fairness, equity, and mutual benefit for all parties involved. Prime Minister Narendra Modi echoed these sentiments, highlighting the EFTA countries' global leadership in innovation and Research & Development across diverse sectors.

Trade Liberalization Amidst Protectionism

Ajay Srivastava, Founder of Global Trade Research Initiative (GTRI), lauded India's confidence and commitment to trade liberalization, especially amidst prevailing global protectionist trends. The signing of this agreement underscores India's strategic move towards fostering stronger trade ties with developed nations.

Resumption of Negotiations

Negotiations for a comprehensive Trade and Investment Agreement between EFTA states and India commenced in 2008, with talks pausing in 2013 before resuming in 2016. The agreement, comprising 14 chapters covering areas such as goods, services, intellectual property rights (IPRs), and investment promotion, has been concluded after around 21 rounds of negotiations.

Trade Dynamics and Future Targets

India's total trade with EFTA nations stood at approximately $18.66 billion in the fiscal year 2022–23, with Switzerland and Norway leading the exchanges. While India faces a trade deficit with Switzerland and Norway, the agreement aims to rebalance trade dynamics by fostering increased investment and job creation in India.

Read also: Chinese Consumer Prices Rise in February, Marking End to Deflationary Trend

Anticipated Growth and GDP Targets

The investment commitment by EFTA states is contingent upon India maintaining a nominal GDP growth rate of around 9.5 percent in US dollar terms over the next 15 years. The agreement also aims to generate one million jobs within India within 15 years of its implementation.