India's first trade deal with European bloc launches October 1
What's the story
India's first-ever trade agreement with a European bloc, the European Free Trade Association (EFTA), will come into effect on October 1. The EFTA comprises four countries: Iceland, Liechtenstein, Norway, and Switzerland. The formal launch of the Trade and Economic Partnership Agreement (TEPA) will be held at Bharat Mandapam in New Delhi. Commerce and Industry Minister Piyush Goyal will lead the ceremony along with senior ministers from EFTA nations.
Agreement details
TEPA signed on March 10, 2024
The TEPA, signed on March 10, 2024, is a landmark in India's trade diplomacy. It is the first such agreement with a European bloc and the first to link market access commitments with investment pledges. Under this deal, India has agreed to eliminate tariffs on 80-85% of goods imported from EFTA countries. In return, Indian exporters will get duty-free access for 99% of goods in EFTA markets.
Investment promise
EFTA countries pledge $100 billion investment in India
The EFTA countries have pledged to invest $50 billion in India over the first 10 years of the deal, and another $50 billion in the next five years. This is expected to create one million direct jobs in India over a period of 15 years. However, since EFTA countries already have low import tariffs, India's immediate gains on market access could be modest.
Trade dynamics
Trade with EFTA nations
Switzerland is India's biggest trading partner among the four EFTA nations. In FY25, India exported goods worth $1.97 billion to the bloc, with nearly three-fourths going to Switzerland. However, imports from the bloc were much higher at $22.44 billion—97% of which came from Switzerland alone—resulting in a trade deficit of $20.47 billion.