Context: India is pushing for the trade deal with EFTA. Also, EFTA nations Switzerland and Liechtenstein are pushing for a Bilateral Trade Agreement with India.
Relevance of the Topic: Mains: Dynamics of India-EFTA trade.
About India-EFTA TEPA
- India signed a free trade agreement (FTA) with four European countries — Iceland, Liechtenstein, Norway, and Switzerland (European Free Trade Association countries) in March 2024.
- This positions EFTA as the first European bloc to formalise a trade pact with India.

Key Highlights of the Agreement:
- Investment commitments: EFTA nations have pledged to invest $100 billion in India over 15 years.
- Tariff reduction: EFTA removes and reduces tariffs on several products like renewable energy and pharmaceutical goods.
- Technology transfer: EFTA countries agree to share technology expertise in the field of precision engineering, pharmaceuticals, financial services and renewable energy.
- Sustainable development progression: EFTA includes clauses to promote green technology, clean energy and responsible business practices.
Present status of TEPA:
- The agreement was signed in March 2024, but has a pending ratification by all the participating nations. TEPA is expected to come into force by the end of 2025.
- Inauguration of India-EFTA Desk:
- India-EFTA Desk will function as a single-window mechanism to provide support to EFTA businesses looking to invest, expand, or establish operations in India.
- It will serve as the primary channel for fostering continuous business-government dialogue.
- Over 100 EFTA companies have visited India to explore business opportunities. E.g., Swiss pharmaceutical giants like Novartis and Roche are planning to expand manufacturing in India.
Scopes and benefits for India:
- Export growth: It is expected to boost Indian exports in pharmaceuticals, textile, jewelry, IT services sector. India’s textile and garment industry is expected to gain a 10-15% increase in exports.
- Boost FDI: Expected $100 billion investment over 15 years in India will foster foreign direct investment in India, enhancing the infrastructure and industrial capabilities.
- Job creation: TEPA is expected to create 1 million jobs by the investment by EFTA firms.
- Strengthen Make-In-India: EFTA led investment will support Make in India initiative, by supporting domestic manufacturing and high-quality goods.
- E.g., Norwegian firms partnering with India for solar energy expansion are promoting the Make in India Solar panels.
- Buffer against US tariffs: India is likely to face tariffs from the US, TEPA will create a buffer for India against the possible US tariffs.
- US has imposed a 25% tariff on steel to prevent dumping, TEPA will enhance the alternate destinations for the Indian steel.
Advantages to EFTA countries:
- EFTA countries will benefit from elimination or reduction of import duties by India on a large number of industrial goods, which include pharmaceutical products, machinery, watches, fertilizers, medicines, chemical products, minerals and fish.
- Exclusion list: However, sectors such as dairy and coal and sensitive agricultural products have been kept in the exclusion list, which means there would not be any tariff cuts by India on these.
- Help EFTA countries diversify their supply chains and render them more resilient.
Constraints in the Agreement
- IPR concerns: EFTA firms emphasise stringent Intellectual Property Rights (IPR) norms, which raises concerns for the Indian companies, particularly pharma sector.
- E.g., Indian Pharma companies worry that strict patent laws will limit their ability to produce low-cost generic drugs.
- Regulatory challenges: EFTA countries maintain high standards and strict food safety norms. Indian agriculture and dairy exporters may face challenges in meeting the strict criteria.
- Trade deficit concerns: India imports high-value goods like luxury watches, advanced machinery from EFTA countries, which can potentially widen India’s trade deficit.
- Bilateral trade issues: There is a scope for bilateral trade disputes.
- E.g., Switzerland withdrew the Most Favoured Nation (MFN) status of India by stating the Principle of Reciprocity, after the Supreme Court's decision in Nestle's Double Taxation Avoidance Agreement (DTAA) case.
EFTA’s has strategic importance to India’s development goals with Norway’s expertise in green shipping, Switzerland’s advancements in rail networks, Iceland’s leadership in geothermal energy, and Liechtenstein’s high-value manufacturing. The research collaborations between IITs and the Arctic University of Norway, demonstrating TEPA’s broader scope beyond trade.









