‘India-EFTA deal strengthens rule of law amid growing global trade uncertainty’: Switzerland’s State Secretary for Economic Affairs

Both India and Switzerland are facing steep US tariffs. How can India and EFTA benefit from the deal amid an increasingly uncertain global trade environment?

The implementation of the (India-EFTA) deal on October 1 could not have come at a better time. It’s excellent news for our entrepreneurs, who are navigating an increasingly complex global environment. This complexity stems not only from bilateral tariff discussions with the United States, but also from the fact that Swiss companies operate manufacturing facilities around the world. As tariffs continue to shift, they face growing uncertainty and volatility. Moreover, the anticipated outcomes of the Section 232 investigations by the US Department of Commerce add yet another layer of complexity. So, having a Trade and Economic Partnership Agreement (TEPA), which strengthens the rule of law, is very important.

These steep 50 per cent tariffs on India are not just making access to American markets difficult, but also leading to investment uncertainty. How do you think these tariffs will impact planned investments by EFTA countries?

I’m not concerned about that. I believe we will see a wide range of relationships developing with India. First, we will have Swiss companies that will simply want to export their products to India. Others may aim to serve the Indian market more directly, perhaps not necessarily by manufacturing entire machines locally, but by providing services such as repair and maintenance. In fact, these services often generate significant added value, as they require training local people, ensuring long-term support. Finally, you’ll have those companies that will set up shop to serve the region, to serve the continent, (and) to serve the world.

My sense is that Swiss companies have understood the importance of being present in large markets. So we are the sixth largest FDI (source) in the US as well, and I believe that the investment now flowing into India is not primarily intended for re-export to the US.

This is evident even in countries such as China, without implying any notion of decoupling.

The same applies to the European Union: many of our members you know have at least one foot in the EU, they’re often present in the US, they’re present in China.

I think what’s happening now — and we’ve had a bit of a late start with India because India is only now opening up really and encouraging FDI… before it was a rather closed market. I think there is great catch-up potential

We are seeing a number of other deals that have an investment portion, like between the US and the EU. For EFTA’s investment pledge to take shape, how are the bilateral investment treaty talks progressing?

I believe the increasing willingness of countries to consider investment pledges is a constructive way to help balance the dynamics between larger markets and smaller markets. Switzerland would therefore welcome the opportunity to re-establish a bilateral investment protection treaty. I would consider this a key element in ensuring the best possible framework for action.

If you read the TEPA, the Swiss private sector committed $100 billion investment and 1 million jobs. In turn, India committed to establishing optimal framework conditions for this investment to smoothly and quickly happen. I’m happy to hear that the signals coming from the Ministry of Finance are quite positive. We’ve been informed that they are working on a model text, which is very encouraging. It’s definitely something that we consider would be a key step now.

Chinese curbs on critical minerals are a concern for India’s industry as it is for the West. Your thoughts on India-EFTA collaborations on the same?

We conducted an independent assessment to assess Switzerland’s dependence on critical minerals, and the findings were mixed. The good news is that Switzerland often imports components, and that’s why we also abolished the industrial tariffs in 2024, because we noticed that actually, by not manufacturing 100 per cent in Switzerland, because we’re too small, we lack space and people, we actually do our companies a favour when we abolish industrial tariffs. So, the good news is we’re not as exposed as others.

The bad news: these rare earth magnets are everywhere. So I now have a coffee machine maker in Switzerland who struggles because there is a rare earth magnet even in my coffee machine. I think finding alternative sources is a key worry.

We’re a liberal market economy, and for us it’s first the companies that have to find ways to source differently and to, you know, create supply chains which are resilient and taking geopolitics into consideration. But of course, India will become more regularly our go-to nation when there is an issue that we need to fix.

That’s why TEPA is so great and is an excellent stepping stone for even more conversations on all sorts of things.

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