India-EFTA agreement set to be launched on October 1 after long wait

India's first European trade deal ensures $100 bn investment, tariff cuts, and potential for 1 million jobs over 15 years

The government is holding a mega event to launch the trade agreement between India and the four-member European Free Trade Association (EFTA) nations, which will come into force from October 1 after a one-and-half-year wait. 

The event will be held at Bharat Mandapam in New Delhi. Commerce and Industry Minister Piyush Goyal, key ministers from the EFTA nations, key government officials as well as several industry participants are expected to attend the programme, government officials said. 

“The idea also is to ensure that industry stakeholders are aware of the deal and well-positioned to take full advantage of it,” a government official told Business Standard. 

The EFTA bloc comprises four nations — Iceland, Switzerland, Norway, Liechtenstein. The trade, also known as Trade and Economic Partnership Agreement (TEPA), is a significant step for India to deepen economic integration with an important economic bloc in Europe. This is also India’s first trade agreement that will come into effect with any European nation or bloc.

Under the deal, India has promised to reduce tariffs to zero on 80-85 per cent goods from EFTA countries, while receiving duty-free market access on 99 per cent goods. Both sides have excluded most of the agri and dairy products from duty concession to protect farmers. 

For India, the biggest gain from the trade agreement is the investment commitment secured from EFTA nations — $50 billion investment in India within 10 years of the agreement taking into effect and an additional $50 billion in the next five years. The investment is expected to facilitate the creation of one million direct jobs in India in 15 years.  

In the case of EFTA nations, import tariffs are low, which means that for India, market access gains could be limited. This is the first deal that India has signed where market access is linked to investment. 

Of all the four EFTA nations, Switzerland is India’s largest trading partner. In FY25, India exported goods worth $1.97 billion, up 1.2 per cent on-year. Of this, three-fourth of the goods were shipped to Switzerland. Imports stood at $22.44 billion in FY25, up 1.7 per cent on-year. Of this, 97 per cent of the imports were from Switzerland at $21.8 billion. As a result, India’s trade deficit with EFTA stood at $120.47 billion. The trade pact was signed on March 10, 2024, but procedural formalities in these four nations have delayed the implementation of the deal.