India Signs $100 Billion Free Trade Agreement With Four European Nations

India has finalized a free trade agreement with the European Free Trade Association (EFTA), comprising Switzerland, Iceland, Norway, and Liechtenstein. The agreement, termed a “watershed moment” by Prime Minister Narendra Modi, promises to inject a $100 billion in investments into the Indian economy over the next 15 years.

India Free Trade Agreement With Four European Nations

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The trade pact, which has been in negotiation since 2008 and underwent 21 rounds of deliberations over nearly 16 years, a milestone as the first free trade agreement between India and European countries. Negotiations concluded with the signing of the Trade and Economic Partnership Agreement (TEPA).

The free trade agreement heralds an investment inflow of $100 billion over the next 15 years from the four European nations, promising to create one million jobs in India.

As part of the agreement, India has agreed to lift or partially remove tariffs on 95.3% of industrial imports from EFTA countries.

Under the agreement, India commits to reducing or eliminating tariffs on a wide range of sectors, including industrial imports, processed foods, beverages, and Swiss watches, providing market access for EFTA member states.

In return, selected agricultural products from Switzerland will gain tariff-free entry into the Indian market. The agreement includes a commitment of $100 billion in investments over the next 15 years from the EFTA countries into India.

This investment pledge is expected to fuel economic growth and create one million jobs in India. India will reduce or eliminate tariffs on various sectors, including industrial imports, processed foods, beverages, and Swiss watches.

Selected agricultural products from Switzerland will gain tariff-free access to the Indian market. The free trade agreement encompasses trade in goods and services, investment promotion, intellectual property rights, government procurement, and trade and sustainable development.

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It also includes provisions for mutual recognition agreements in professional services, facilitating collaboration and market integration.

Negotiations for the Trade and Economic Partnership Agreement (TEPA) between India and the EFTA countries commenced in 2008 and concluded after 21 rounds of negotiations spanning nearly 16 years. This is the first free trade agreement between India and European countries.

While the free trade agreement has been signed, it will come into force after ratification by all five countries involved, India, Liechtenstein, Iceland, Norway, and Switzerland. Switzerland has announced plans to initiate the parliamentary approval process immediately.

The free trade agreement is expected to stimulate Indian exports, particularly in sectors like IT services, business services, and audio-visual services. It provides an opportunity for Indian exporters to access European and global markets.

Certain sectors such as dairy, agriculture, and gold, the largest import from Switzerland are excluded from the agreement. Efforts have been made to address asymmetries in the economies of the EFTA region and India.

This free trade agreement adds to India’s existing portfolio of 13 regional and free trade agreements and its commitment to pursuing trade pacts with partners globally.

India is currently negotiating agreements with the European Union, the United Kingdom, Oman, Peru, and Israel, among others.

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