Opinion Express View on India-EFTA pact: Trade gains
The pact signals greater openness, a willingness to enter into broader and deeper agreements
As per the newly signed agreement, the EFTA states shall aim to increase FDI into India by $50 billion within 10 years, and another $50 billion in the five years thereafter. 
Over the past few years, the Narendra Modi government has been actively pursuing trade agreements. It has signed an economic cooperation and trade agreement with Australia and a comprehensive economic partnership agreement with the UAE. Talks are also on with the UK and the EU. And on Sunday, after 16 years of negotiation, the government has signed another trade agreement with the four-nation European Free Trade Association (EFTA), comprising Iceland, Liechtenstein, Norway and Switzerland. These are welcome developments. They signal greater openness and desire to push through trade agreements and a change from the times when negotiations would be abandoned midway.
As per the newly signed agreement, the EFTA states shall aim to increase FDI into India by $50 billion within 10 years, and another $50 billion in the five years thereafter. This could facilitate the generation of one million direct jobs in the country. To provide some perspective — EFTA investment stood at $10.7 billion in 2022. Switzerland is India’s largest trading partner in this bloc of nations, followed by Norway.
In fact, India has a trade deficit with Switzerland, largely due to gold imports. After the treaty comes into effect, the EFTA nations will see a reduction in tariffs. As reported in this paper, the agreement will result in the “elimination of duties on most industrial goods exported to India”, such as pharmaceutical products, machinery, watches, fertilisers, medicine, chemical products and others.
India is offering “82.7 per cent of its tariff lines which cover 95.3 per cent” of the grouping’s exports. However, most agricultural items have reportedly been kept outside the purview of this deal. EFTA’s “market access offer covers 100 per cent of non-agri products”. The services sector also forms a vital part of this trade agreement. The agreement would help stimulate services exports in areas such as information technology and facilitate the movement of key skilled personnel.
The Indian government had set an ambitious target of $2 trillion in exports of goods and services by 2030. Achieving this will require policy action on a range of issues — from lowering tariffs to entering into deeper, more expansive free trade agreements while safeguarding the country’s interests. It also calls for ensuring that measures are taken so that the benefits from these trade agreements are fully reaped. At this critical juncture in the country’s development trajectory, it must push ahead.
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