India signs $100bn free trade deal with European EFTA bloc

India to lift import tariffs for several industrial products from four-nation group in return for 15-year investment.

India's commerce minister Piyush Goyal talks to a crowd
India's Commerce Minister Piyush Goyal at a World Trade Organization meeting in Abu Dhabi, UAE, on March 1, 2024 [Emma Farge/Reuters]

India has signed a $100bn free trade agreement with a four-member European bloc and will lift most import tariffs on industrial products from these countries in return for the investment over 15 years.

The deal signed on Sunday with the European Free Trade Association (EFTA) – after several rounds of negotiations spanning 16 years – will see investments across a range of Indian sectors, including pharmaceuticals, machinery and manufacturing.

The EFTA comprises Switzerland, Norway, Iceland, and Liechtenstein, all non-European Union nations, that will get access to a fast-growing market of 1.4 billion people, said India’s Minister for Commerce and Industry Piyush Goyal.

“The India-EFTA Trade and Economic Partnership Agreement [TEPA] marks a historic milestone in our growing partnership,” Goyal said after the signing in New Delhi.

It “will pave the path for mutual growth and prosperity” by boosting exports, promoting investment and creating employment, he added.

In the last two years, India has signed trade agreements with Australia and the United Arab Emirates, and officials say a deal with the United Kingdom is in the final stages as Prime Minister Narendra Modi aims to hit $1 trillion in annual exports by 2030.

India will lift, or partially remove, very high customs duties on 95.3 percent of industrial imports from Switzerland, excluding gold, either immediately or over time, the Swiss government said in a statement.

“Norwegian companies exporting to India today meet high import taxes of up to 40% on certain goods,” Industry Minister Jan Christian Vestre said in a separate statement.

“With the new deal, we have secured nil import taxes on nearly every Norwegian good.”

Under the agreement, Indian agricultural exporters will enjoy liberalised trade rules in the form of tariff concessions in the European bloc. Professionals will also be able to take up jobs in the EFTA zone, officials said.

The pact covers some new elements such as intellectual rights and gender equity, Goyal said, telling a news conference, “It is a modern trade agreement, fair, equitable and win-win for all five countries.”

The five must ratify the deal before it can take effect, with Switzerland planning to do so by 2025.

The signing comes ahead of India’s general elections, due by May, in which Modi will seek a third term.

India is EFTA’s fifth-largest trading partner after the EU, the United States, the UK and China, with total two-way trade of $25bn in 2023, its Ministry of Trade estimates.

Formed in 1960 as a counterweight to the EU, the EFTA has signed about 30 trade agreements with some 40 countries and territories outside the EU.

Source: News Agencies