Over the weekend, India and four European nation bloc European Free Trade Association (EFTA) is set to be firmed up. Sources confirmed to Financial Express Online, “Trade and Economic Partnership Agreement (TEPA), will be signed on Sunday. Countries including Norway, Iceland, Liechtenstein, and Switzerland form the EFTA. These four countries are not part of the EU.”
Adding, “It should not be confused with the ongoing India-EU FTA negotiations. Those talks are still going on. The EFTA countries are not part of the EU.” This is the first Free Trade Agreement where India has managed to get assurance on investment and employment from the partner nations.
What are the Countries Bloc looking at?
The EFTA bloc is keen at investing in joint ventures in a wide range of areas including medical devices, engineering products, food processing, certain chemicals and most importantly pharmaceuticals.
The bloc over the next 15 years has also made a commitment of US$ 100 bn investments into India. This will help to generate an estimated one million jobs.
Negotiations for TEPA
In 2016, the four nations bloc re-started their negotiations for a free trade pact with India. This is formally known as a broad-based Trade and Investment Agreement. According to reports in the public domain, the various chapters contained in the proposed pact include: trade & sustainable development, customs & trade facilitation, investment promotion & cooperation, trade in goods, rules of origin, and trade in services.
The anticipated influx of investments into India from the EFTA countries is expected to primarily originate from their provident funds, according to an official source. Joint venture opportunities identified by the nations largely encompass sectors where India faces minimal competition. According to officials, “EFTA’s agreement to invest in India stems from the prospect of market access and the absence of competition in designated sectors. For instance, India heavily relies on medical device imports from China, thus necessitating diversification.”
Regarding exports to the EFTA bloc, India recorded US$1.87 billion in exports in 2023, featuring prominent categories such as chemicals, pharmaceuticals, apparel, pearls, and precious & semi-precious stones. Conversely, imports from the EFTA countries totalled US$20.45 billion in 2023, with significant inflows of pearls, precious or semi-precious stones, precious metals, and coins valued at US$16.7 billion.