India-EFTA trade pact seen to help diversify exports, bring in investments

The India-European Free Trade Association trade pact that comes into effect from today is expected to boost not just the country’s foreign trade but also confidence of exporters, who have been grappling with the high tariffs imposed by the US.

With India working on multiple free trade agreements (FTAs), the operationalisation of this trade pact will help diversify its export markets, and policy watchers said will be a feel-good factor.

The Trade and Economic Partnership Agreement (TEPA) between India and the four-nation bloc of Switzerland, Norway, Lichtenstein and Iceland, which was signed in March last year after over 16 years of discussions, includes for the first time a commitment linked to job creation and investments with the aim to facilitate $100 billion of FDI in India over the next 15 years and generate 1 million direct jobs in the country through these.

Under the agreement, EFTA has also offered 92.2% of tariff lines encompassing 99.6% of India’s exports as well as all non-agricultural products, said a commerce ministry release. India’s offer to EFTA covers 82.7% of tariff lines, accounting for 95.3% of EFTA exports.

India is EFTA’s fifth-largest trading partner, with bilateral goods trade valued at about $23 billion. Indian exporters in sectors like machinery, organic chemicals, textiles, and processed foods are to expected to enjoy significantly improved access to EFTA markets though the TEPA. For Indian consumers, prices of wines, olives, avocados, apricots, coffee and chocolates are set to come down over the years, although Swiss cheese has been kept out of the agreement.

Anant Swarup, Senior Advisor, Trade Policy, EY India, noted that the total annual EFTA imports (goods and services) is estimated at around $430 billion, with India’s current share of this market still modest highlighting substantial growth potential.

"India stands to benefit most in sectors like pharmaceuticals, organic chemicals, food processing, engineering goods, IT services, and professional services. These sectors will see expanded market access and reduced tariffs, enabling Indian exporters to tap into high-value European markets and attract substantial investment for domestic manufacturing," he said.

As per an analysis by the Confederation of Indian Textile Industry, India was the seventh largest supplier of textile and apparel items to Switzerland in 2024, accounting for 3.5% of Switzerland’s total textile and apparel imports from the world. During 2024, Switzerland imported textile and apparel products worth $367.63 million from India.

"The TEPA will come in most handy as part of our diversification strategy," said CITI Chairman Ashwin Chandran.