Opinion Secretary General, EFTA writes: Economic pact between India and EFTA states will further boost trade, investment

The potential benefits of a Trade and Economic Partnership Agreement between India and EFTA states are significant. The agreement will foster a strong partnership and increase trade between trusted democratic partners that share values

EFTA states are partners in India’s growth story. They have contributed by way of significant investments of over $35 billion in India. These investments span sectors such as machinery, electrical engineering and metals, pharmaceuticals, banking, financial services and insurance, construction and fast-moving consumer goods.

Henri Gétaz

May 1, 2023 08:52 AM IST First published on: May 1, 2023 at 07:50 AM IST

On April 26, high-level delegates from the four European Free Trade Association (EFTA) states — Iceland, Liechtenstein, Norway and Switzerland — and India met in New Delhi “to discuss the prospects of resuming their negotiations towards a Trade and Economic Partnership Agreement (TEPA)”. A joint statement issued at the end of the talks reflects the parties’ common decision to “continue their efforts to resolve all issues outstanding and work towards deepening and strengthening the economic partnership, while contributing to a more inclusive global trading system”, a message of a shared desire to conclude a mutually beneficial TEPA at the earliest — for good reasons.

You might be asking what the relatively small EFTA states, with a total population of just over 14 million, could offer India. The EFTA states may be small, but their economies stand tall with imports and exports of goods and services close to $1.3 trillion in 2021, making them the 10th largest merchandise traders and eighth largest services traders worldwide. These small mountainous countries developed their labour force into highly skilled individuals due to topographic conditions that did not allow heavy industries. Today, the four nations rank among the highest in the world in innovation, competitiveness, wealth creation per inhabitant, life expectancy, and quality of life. EFTA companies are world leaders in pharmaceuticals, biotechnology, machinery manufacturing, R&D-driven technology products, geothermal-related technologies, marine technology, energy-related services, financial services, banking and insurance.

EFTA has a track record of negotiating mutually beneficial trade agreements, which to date cover an extensive network of 29 free trade agreements (FTAs) with 40 partner countries. Nearly 22 per cent of EFTA states’ imports come from these FTA partners. In Asia, agreements are in place with Hong Kong, Indonesia, the Philippines, South Korea, and Singapore, and negotiations are ongoing with Malaysia, Thailand, and Vietnam. A TEPA between Iceland, Liechtenstein, Norway, Switzerland, and India will be, and must be, a win-win for all parties. Let me explain.

First, India’s impressive economic growth and its leadership in the development of green technologies are an inspiration, which EFTA states can complement and support by strengthening trade and investment ties. A trade agreement would benefit both sides by way of enhancing trade, promoting technology and knowledge transfer, facilitating R&D and innovation, and encouraging business collaboration. Furthermore, improved market access for goods will boost India’s export potential to EFTA markets, where the latter’s export products frequently serve as inputs in Indian export industries.

Second, EFTA states are partners in India’s growth story. They have contributed by way of significant investments of over $35 billion in India. These investments span sectors such as machinery, electrical engineering and metals, pharmaceuticals, banking, financial services and insurance, construction and fast-moving consumer goods (FMCG). A trade pact is estimated to increase investments in India significantly.

Third, EFTA and India have a mutually beneficial relationship when it comes to skilled labour. The EFTA states gain from the highly skilled Indian workforce, notably in the services sector, while India benefits from over 400 companies established by EFTA states, generating more than 150,000 jobs. Indeed, EFTA states benefit from Indian service providers, with around 20,000 professionals contributing to Norway’s high-tech industry alone. Similarly, India consistently ranks first in terms of work permits issued to non-EU citizens in Switzerland. This contributes to the economic growth and welfare of both countries, supporting their important bilateral trade relationship. A trade agreement between EFTA and India would increase predictability in the services sector, creating more business opportunities for skilled Indian service providers.

Last but not least, EFTA states and India can collaborate on green growth. India aims to meet 50 per cent of its energy needs with renewables by 2030, with potential for scaling up projects and cooperation in solar, wind, hydro and geothermal power. With their cutting-edge technologies, EFTA states can contribute to India’s green growth aspirations.

The potential benefits of a TEPA between India and EFTA states are significant. The agreement will foster a strong partnership and increase trade between trusted democratic partners that share values such as promoting sustainable development and gender equality. EFTA is committed to making these trade talks our priority and aims for a swift process towards a balanced agreement with strong political involvement and guidance.

The writer is Secretary General, European Free Trade Association