Switzerland ratifies landmark India-EFTA mega trade pact: Here’s what it means for Indian economy.
Switzerland’s ratification of the India-EFTA (European Free Trade Association) Trade and Economic Partnership Agreement (TEPA) marks a significant step forward in deepening economic and trade relations between India and the EFTA bloc (comprising Iceland, Liechtenstein, Norway, and Switzerland).
Here’s what it means for the Indian economy:
- Investment and job creation
Significant Investment Inflow: The EFTA states have committed to investing $100 billion in India over the next 15 years, a legally binding commitment and a unique feature of this Free Trade Agreement (FTA).
Boost to Employment: This investment is anticipated to generate one million direct jobs in India, fostering employment opportunities for the country’s youth, according to Vision IAS.
Focus on Manufacturing and Infrastructure: The investments are expected to primarily target manufacturing sectors like chemicals, pharmaceuticals, machinery, food processing, as well as infrastructure and connectivity projects, according to Invest India.
- Market access and trade opportunities
Enhanced Market Access for India: The EFTA bloc is offering 92.2% of its tariff lines, covering 99.6% of India’s exports, providing Indian businesses with improved access to European markets, especially in non-agricultural products.
Services Sector Boost: The agreement is expected to stimulate India’s services exports, particularly in areas like IT, business services, personal, cultural, sporting, recreational, education, and audio-visual services.
Access to Specialized Inputs and Technology: The TEPA facilitates Indian exporters’ access to specialized inputs and fosters technology collaboration, including access to world-leading technologies in areas like precision engineering, health sciences, and renewable energy, according to the Press Information Bureau.
Integration with EU Markets: The deal presents an opportunity for India to potentially integrate into the larger EU markets, as Switzerland’s global services exports heavily rely on the EU, according to the Press Information Bureau.
- Benefits for consumers and businesses
Cheaper Imported Products: India’s phase-out of customs duties on certain imported goods will make high-quality Swiss products like watches, chocolates, and clocks more affordable for Indian consumers.
Streamlined Procedures: The TEPA aims to reduce non-tariff barriers, streamline customs procedures, and enhance intellectual property protection, creating a more favorable environment for trade and investment.
Promotion of “Make in India”: The agreement is expected to give impetus to the “Make in India” initiative by encouraging domestic manufacturing in key sectors.
- Challenges and considerations
Trade Deficit: India currently faces a significant trade deficit with the EFTA bloc, with imports largely dominated by gold from Switzerland.
Exclusion of Sensitive Sectors: India has excluded sensitive sectors like agriculture and dairy from significant tariff reductions, which may limit the benefits for some EFTA exporters.
Regulatory Disparities: Differences in product standards, quality requirements, and environmental regulations between India and EFTA countries could pose challenges for businesses.
In conclusion, Switzerland’s ratification of the India-EFTA trade pact opens new avenues for trade, investment, and collaboration, bringing potential benefits to various sectors of the Indian economy and fostering closer ties between India and the EFTA nations.
While challenges exist, the agreement is a crucial step towards strengthening India’s position in global trade and promoting economic growth and development.
