India-EFTA agreement kicks in, Goyal says deal offers predictability

The trade agreement between India and the four-member European Free Trade Association (Efta) sends the message that these two geographies are providers of a “stable and predictable” environment, said Union Commerce and Industry Minister Piyush Goyal on Wednesday.

 

This, according to the minister, will enable businesses to plan their future efficiently.

 

The trade agreement came into force on October 1.

 

The deal was signed in March last year.

 

Efta comprises four nations — Iceland, Switzerland, Norway, and Liechtenstein.

 

“This will be a victory of clarity and certainty in these uncertain and volatile times, in these times full of ambiguity and disturbed global trade … it signals new beginnings and a huge opportunity for businesses on both sides,” Goyal said at the “India-Efta Prosperity Summit”.

 

The agreement, also known as “Trade and Economic Partnership Agreement (Tepa)”, is a step for India to deepen economic integration with an important economic bloc in Europe.

 

This is also India’s first trade agreement with any European nation or bloc coming into effect.

 

The timing of the implementation of the deal is crucial, considering geopolitical uncertainties and the protectionist policies of the United States (US).

 

Under the pact, Efta will aim to increase foreign direct investment (FDI) in India by $50 billion within 10 years, and an additional $50 billion in the next five years, which, according to Indian officials, is one of the biggest wins.

 

The investment is expected to help create one million direct jobs in India in 15 years. It explicitly excludes foreign portfolio investment (FPI), focusing on long-term capital for productive capacity building. 

 

Over a dozen companies from the four European nations announced stepping up their investment plans in India. Goyal invited them to build partnerships with Indian companies.

 

Helene Budliger Artieda, Swiss state secretary for economic affairs, said the strong presence of companies from Switzerland and other Efta countries on Wednesday’s prosperity summit spoke for itself. 

 

“These businesses are here because they believe in India and are ready to use the Trade and Economic Partnership Agreement. They see the potential, they want to invest, and they are ready to be part of India’s growth story. Swiss and Indian economies are complementary. Tepa will bring these complementarities together for the benefit of both Switzerland and India,” she said.

 

Under Tepa, Efta nations have offered 92.2 per cent of tariff lines, encompassing 99.6 per cent of India’s exports. It includes 100 per cent of non-agricultural products and tariff concessions on processed agricultural products.

 

India’s offer to Efta covers 82.7 per cent of tariff lines, accounting for 95.3 per cent of the bloc’s exports.

 

Over 80 per cent of these imports are gold, with no change in effective duty on the metal. 

 

Under the pact, India has safeguarded sectors such as dairy, soya, coal, and sensitive agricultural products.

 

Deep Kapuria, chairman, The Hi-Tech Group & Global Innovation and Technology Alliance, said the deal would provide an opportunity to India to attract Swiss FDI in research and development (R&D).

 

“Currently India’s R&D investment as a percentage of GDP remains low compared to global leaders like China, the US, and Israel. India’s R&D expenditure remains around 0.65 per cent of GDP, while countries like China, the US, and South Korea spend significantly more, with figures ranging from 2.4 per cent to 4.8 per cent,” Kapuria said.