In a major boost to New Delhi’s global trade, India has signed a deal with the European Free Trade Association – a four-nations bloc comprising Norway, Switzerland, Iceland and Liechtenstein. This Trade and Economic Partnership Agreement (TEPA) comes as India, being the economic bright spot, is bolstering its efforts to become a reliable trade partner to the world.
After 21 rounds of negotiations over 15 years, this deal is set to attract US$ 100 billion in investments in India over the next decade or so. The commitments will be fulfilled through private entities and sovereign wealth funds, which will give a massive boost to India’s domestic employment as well as growth. The industries that will benefit the most from this deal include pharma, chemical, food processing, and engineering.
India’s Prime Minister Narendra Modi hailed the deal as “a new turn and a watershed moment in the bilateral relationship between India and EFTA countries.”
The EFTA countries are also set to gain from this pact with reduced import duties. Under the agreement, the Swiss government said that India will lift or partially remove customs duties on about 95% of industrial imports from Switzerland either immediately or over time. Norway said it had achieved near-zero import taxes on most Norwegian goods. “With the new deal, we have secured nil import taxes on nearly every Norwegian good,” Norwegian Industry Minister Jan Christian Vestre said.
But why is this deal momentous? The simple answer is – China. This will allow India to diversify imports away from China. Currently, China runs a massive trade surplus with India. This deal is crucial in India’s economic ambitions and its quest to become the third-largest economy by 2027. At the same time, this deal gives EFTA countries a reliable alternative to investments and supply chain stability.
“India will be world’s premier manufacturing, service hub,” said Swiss Secretary Helene Budliger Artieda lauding the India-EFTA Trade Economic Partnership Agreement.
India is trying to get more and more trade agreements in its pocket. It already has trade agreements with Mauritius, UAE, and Australia, which have been recently concluded. While talks are underway for agreements with the EU bloc and the UK. This shows India’s commitment to ‘walk the talk’ when it comes to providing the world with an alternative to China.
India’s Minister of Commerce and Industry Piyush Goyal reiterated India’s commitment to building robust ecosystems that support foreign business and investment. “Solid foundation that has been laid in India with strong macroeconomic fundamentals, is a big opportunity for businesses,” he said.
This first-of-a-kind trade deal is a win-win situation for all the parties involved showcasing India’s confidence in negotiating trade deals that enforce its value of a ‘prosperous future for all.’ “Despite structural diversities in many aspects, our economies possess complementarities that promise to be a win-win situation for all nations. With the opening of enormous trading and investment opportunities, we have reached a new level of trust and ambition,” said PM Modi.
The government of India has assured the EFTA countries that “India will extend all possible support to EFTA countries and facilitate industry and businesses not only to achieve the committed targets but also to go beyond them.”
(Deepakshi Bhardwaj contributed inputs for this article)
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