India-EFTA Free Trade Agreement: Boosting Investment and Jobs

After 16 years of negotiations and 21 formal rounds, India and the four European Free Trade Association (EFTA) countries have signed a significant free-trade agreement (FTA). This FTA aims to attract $100 billion in foreign direct investment (FDI) to India over 15 years, creating around 1 million jobs.

Under the agreement, EFTA nations will enjoy duty-free access to India for products like Swiss watches and chocolate. India can withdraw tariff concessions if investment commitments aren’t met.

The agreement targets a $50 billion increase in FDI from EFTA states within the first decade and an additional $50 billion in the following five years. Prime Minister Narendra Modi hailed it as a milestone, promoting fair trade and growth.

Commerce Minister Piyush Goyal praised the innovative FTA for addressing economic disparities. Sectors like pharmaceuticals and engineering are expected to benefit, reducing import dependency and creating jobs.

The Swiss State Secretary for Economic Affairs, Helene Budliger Artieda, highlighted the challenge of balancing the agreement between India and the smaller EFTA nations.

The FTA eliminates tariffs on 80-85% of goods from EFTA countries, with nearly all goods receiving duty-free access to India, except for sensitive sectors like agriculture and dairy.

India maintains tariffs on goods like gold and automobiles, with a slight reduction in tariffs on gold. Investments from outside EFTA will only count if they originate from EFTA states.

Chandrajit Banerjee, Director General of the Confederation of Indian Industry, praised the agreement for fostering collaboration and benefiting Indian industries.