NB Explains | India, European Free Trade Association announce $100-bn free trade pact to boost investments
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New Delhi, Mar 11: In a huge development, India and the European Free Trade Association (EFTA) signed a landmark trade and economic partnership agreement (TEPA) to open up the EFTA markets for Indian businesses and the Indian markets for the EFTA. The development comes as a win for the Indian government which was looking to push through a trade deal before the general elections slated to be held between April and May 2024.
Notably, the EFTA comprises Iceland, Liechtenstein, Norway and Switzerland. This TEPA is the third free trade agreement that India has signed in recent years after earlier deals with the United Arab Emirates (UAE) and Australia. The agreement with the EFTA took nearly 15 years to come to fruition.
Piyush Goyal, the minister of commerce and industry, signed the EFTA on behalf of India in New Delhi.
"TEPA is a modern and ambitious Trade Agreement. For the first time, India is signing FTA with four developed nations - an important economic bloc in Europe. For the first time in history of FTAs, binding commitment of $100 bn investment and 1 million direct jobs in the next 15 years has been given. The agreement will give a boost to Make in India and provide opportunities to young & talented workforce. The FTA will provide a window to Indian exporters to access large European and global markets."
Prime Minister Narendra Modi in a written statement said the agreement marks a new ‘watershed’ moment in the bilateral relationship between India and the EFTA countries.
Delighted by the signing of the India-EFTA Trade & Economic Partnership Agreement. This landmark pact underlines our commitment to boosting economic progress and create opportunities for our youth. The times ahead will bring more prosperity and mutual growth as we strengthen our… https://t.co/z40wurQn9M pic.twitter.com/i9vQM9jYAi
— Narendra Modi (@narendramodi) March 10, 2024
Boost to investment
India expects that the pact, following deals with the UAE and Australia, will boost exports of pharmaceuticals, garments, chemicals and machinery while attracting investments in automobiles, food processing, railways and the financial sector.
India is the EFTA's fifth-largest trading partner after the European Union, the United States, Britain and China, with total two-way trade touching $25 billion in 2023, its trade ministry estimates. Its exports to the EFTA touched $2.8 billion and imports were about $22 billion during that period. With a population of 13 million and a combined GDP of more than $1 trillion, the EFTA nations are the world's ninth-largest merchandise trader and its fifth largest in commercial services.
Chapters of TEPA
The agreement consists of 14 chapters, which include government procurement, investment promotion and cooperation, trade in services, trade remedies, sanitary conditions, trade in goods and protection of intellectual property.
Article 14.3 of the agreement mandates a review of the TEPA two years after it comes into force. After the first review, the two parties, the EFTA and India, would conduct biennial reviews as “considered mutually appropriate”.
The agreement will come into force on the first day of the third month, after India and the EFTA countries have deposited their instruments of ratification, approval or acceptance to the depository country.