Explained: India, EFTA sign trade agreement; why it matters and more
PTC News Desk: India and the four-nation bloc European Free Trade Association (EFTA) on Sunday sign a free trade agreement that is expected to attract $100 billion in investments over the next 15 years.
The signing of the pact, officially known as the Trade and Economic Partnership Agreement (TEPA), comes after approval by the Union Cabinet on March 7.
Delegation that will sign India-EFTA trade deal
The EFTA consists of four members: Iceland, Norway, Switzerland, and Liechtenstein.
Guy Parmelin, Swiss Federal Councillor and Head of the Department of Economic Affairs, Education and Research; Dominique Hasler, Minister of Foreign Affairs of Liechtenstein; and Jan Christian Vestre, Minister of Trade and Industry of Norway; Bjarni Benediktsson, Minister of Foreign Affairs of Iceland will sign the deal on Sunday.
Significance of India-EFTA trade deal
The free trade agreement is expected to benefit sectors that handle almost all industrial goods exported from India to the EFTA.
Another official stated that Indian-processed agricultural products may have greater market access in the four EFTA countries. In addition, the agreement is likely to include sectors such as pharmaceuticals, medical devices, and processed foods.
Items such as dairy, sensitive agricultural products, and soya, among others, would remain on the exclusion list, with no duty concessions included in the agreement.
Under free trade agreements, two trading partners significantly reduce or eliminate customs duties on the maximum number of goods traded between them, while also relaxing norms to encourage trade in services and investments.
The Free Trade Agreement
According to an official, India has requested an investment commitment of $50 billion from the bloc members within the first ten years of the agreement's implementation, followed by another $50 billion over the next five years.
With this, India aims at generating 1 million direct jobs in the nation. This commitment would be linked to a reduction in duty under the agreement.
The agreement is divided into 14 chapters, which cover trade in goods, rules of origin, trade in services, investment promotion and cooperation, government procurement, intellectual property rights (IPRs), technical trade barriers, and trade facilitation.
Since January 2008, India and the EFTA have been negotiating a free trade agreement to strengthen their economic relations.
Crucial timing for India
India is preparing for elections, which could result in a long pause in free trade agreements (FTAs) between the country and its trading partners. However, time is running out as the global supply chain is swiftly resetting, with investment shifting away from China for the first time in recent history.
While India is considered as a top contender by global inventors, Asean countries led by Vietnam and North American countries such as Mexico are emerging as attractive investment destinations. A delay in streamlining investment flows and renewed attempts at global integration could result in a missed geopolitical opportunity.
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