India-EFTA Trade Deal to Attract $100 Billion Investment in 15 Years
A trade agreement between India and the four-member European Free Trade Association (EFTA) is set to be signed, with an investment totaling $100 billion over 15 years. This investment will be associated with the goal of generating one million jobs in India, as informed by sources familiar with the situation. “A mechanism and a road map will be developed to achieve that kind of investment”, one of the persons cited above told.
The commitment is anticipated to form a segment of the investment chapter within the proposed trade agreement, rather than existing as a distinct investment pact. A delegation of officials representing the EFTA nations — Iceland, Switzerland, Norway, and Liechtenstein — is scheduled to arrive in New Delhi over the weekend for the formal signing of the Trade and Economic Partnership Agreement (TEPA). This marks India's inaugural trade pact with any European nation or bloc, and the fourth trade agreement slated for signing within a decade.
In February 2021, India inked a free-trade agreement with Mauritius, succeeded by agreements with the United Arab Emirates (UAE) and Australia a year later. Within the framework of the TEPA, both nations are projected to grant duty-free access to a wide array of goods spanning various sectors. The most significant advantage for India under this agreement will be the commitment to a $100 billion investment. This is primarily because import duties in the EFTA nations are not substantially high. Consequently, India may encounter limited gains in terms of market access.
India and the EFTA nations had launched negotiations on a broad-based trade and investment agreement more than 15 years ago. As many as 13 rounds of negotiations were held, after which talks were suspended in 2013. Talks resumed in 2016 and four more rounds of negotiations took place, and finally again in 2023. The last or the 21st round of talks took place during January 8-13 in New Delhi. Of all the four EFTA nations, Switzerland is India’s largest trading partner. Last financial year, India’s trade with EFTA countries resulted in a substantial trade deficit In FY23, India’s trade deficit with EFTA stood at $14.8 billion.
Exports amounted to $1.9 billion, while imports reached $16.7 billion, resulting in a trade deficit. This deficit is largely due to significant gold imports from Switzerland. An India-Oman Free Trade Agreement (FTA) is currently being prepared for consideration by the Cabinet, according to informed sources. The Department of Commerce is in the process of finalizing a Cabinet note seeking approval for the FTA between India and Oman. India is eager to conclude the trade pact before the implementation of the model code of conduct preceding the general elections. The announcement of the model code of conduct is anticipated early next week.
The anticipated trade agreement between India and the United Kingdom (UK) might not be completed prior to the implementation of the model code of conduct (MCC). However, officials have indicated that the deal is substantially complete, though some adjustments may still be necessary. Given the imminent arrival of the MCC, it could prove challenging to make an announcement and conduct the signing of the trade deal at a ministerial level.