India and the EFTA Nations

The Trade and Economic Partnership Agreement (TEPA), signed between India and the European Free Trade Association (EFTA), is a landmark agreement designed to boost trade, investment, and employment while promoting economic integration between India and four EFTA nations: Iceland, Liechtenstein, Norway, and Switzerland. The agreement is set to come into force on 1st October 2025 and marks the culmination of 21 rounds of negotiations since 2008.

Key Highlights of TEPA

1. Strategic Investment Commitment:

   • EFTA countries commit to investing USD 100 billion in India over the next 15 years.

     • USD 50 billion will be invested in the first 10 years, and an additional USD 50 billion will be invested in the next 5 years.

   • This investment is expected to create 1 million jobs in India.

2. Market Access & Tariff Concessions:

   • EFTA will offer 92.2% tariff lines, covering 99.6% of India's exports (excluding agricultural and some processed agricultural goods).

   • India will provide 82.7% tariff lines covering 95.3% of EFTA exports, with specific exemptions, such as gold (no change in duty).

   • Indian rice (both Basmati and Non-Basmati) will have duty-free access to EFTA markets, with no reciprocity required.

3. Safeguards & Exclusions:

   • Sensitive sectors such as dairy, soya, coal, and PLI-linked sectors (Production-Linked Incentive) are excluded from tariff concessions.

   • Sovereign wealth funds are exempted from Foreign Direct Investment (FDI) obligations under TEPA.

4. Services & Mobility:

   • The agreement will support Indian services in IT, education, culture, and sports.

   • Mutual Recognition Agreements (MRAs) will be established for nursing, accountancy, and architecture professions, making it easier for Indian professionals to work in EFTA countries.

5. Legal Framework & IP Protection:

   • TEPA covers 14 chapters, including important aspects like Intellectual Property (IP), customs cooperation, and trade dispute resolution.

   • India retains the right to withdraw tariff concessions if the investment targets are not met.

   • Generic drug production will be protected, and measures like evergreening of patents (extension of patent life beyond its natural expiry) will be addressed.

What is the European Free Trade Association (EFTA)?

• EFTA is an intergovernmental organization established in 1960 under the Stockholm Convention, aimed at promoting free trade and economic integration among its member states: Iceland, Liechtenstein, Norway, and Switzerland.

• Notably, all four of these nations are not part of the European Union (EU), and the EFTA facilitates trade agreements with the EU and other global partners.

India-EFTA Trade Relations

• India is the 5th largest trading partner for EFTA, following the EU, US, UK, and China, with a total two-way trade of USD 24.4 billion in 2024–25.

• Switzerland remains India’s largest trading partner within EFTA, while trade with Iceland, Liechtenstein, and Norway is relatively limited.

Trade Profile:

• Imports from EFTA: Major imports include gold (USD 20.7 billion in 2021–22), silver, coal, pharmaceuticals, vegetable oil, medical equipment, and dairy machinery.

• Exports to EFTA: India exports chemicals, iron and steel, gold, precious stones, yarns, sports goods, glassware, and bulk drugs.

India-EFTA Desk:

• The India-EFTA Desk was established to foster stronger economic ties and facilitate investments under the TEPA. This platform, managed by Invest India, acts as a single-window for businesses from EFTA countries to invest in India.

Key Challenges Related to India-EFTA Relations

1. Persistent Trade Deficit:

   • India runs a significant trade deficit with EFTA, primarily due to gold imports from Switzerland. The imbalance in trade with EFTA nations, particularly due to gold, remains a persistent concern for India.

2. Data Exclusivity & Public Health:

   • EFTA's push for data exclusivity in the pharmaceutical sector could restrict India’s ability to produce and distribute generic drugs at affordable prices, potentially impacting public health.

3. IPR Concerns under TEPA:

   • The IPR provisions under TEPA may weaken India’s patent safeguards, affecting pre-grant opposition procedures and local manufacturing requirements. This could raise concerns regarding access to affordable medicines and the transparency of patent enforcement mechanisms.

Way Forward

1. Mitigate Trade Deficit:

   • India should encourage value-added exports to diversify its trade basket and reduce the over-reliance on gold imports, thus addressing the trade imbalance with EFTA nations.

2. Capacity Building & Sustainability:

   • Leverage EFTA's expertise in clean technologies, sustainability, and innovation to strengthen India’s green transition and skilling ecosystem, creating new opportunities in the green economy.

3. Balanced IPR Framework:

   • India must ensure that the Intellectual Property provisions in TEPA safeguard innovation without undermining public health needs, especially in the context of India’s thriving generic drug industry.

4. Leverage India–EU FTA Momentum:

   • India can build on the ongoing India-EU FTA negotiations, which are targeted to conclude by 2025, to align its regulatory frameworks, address Non-Tariff Barriers (NTBs), and strengthen resilient supply chains, improving India’s global trade positioning.

The TEPA marks a significant milestone in India-EFTA relations, creating new opportunities for trade, investment, and economic cooperation. By strategically navigating challenges like the trade deficit and intellectual property concerns, India can optimize its engagement with EFTA, enhancing its global economic footprint and promoting sustainable growth.