In News:

The Trade and Economic Partnership Agreement (TEPA) between India and the European Free Trade Association (EFTA) — comprising Iceland, Liechtenstein, Norway, and Switzerland — will come into force on 1 October 2025.

Key Features of TEPA

• Strategic Investment Commitment
  • Legally binding commitment of USD 100 billion FDI in India over 15 years (USD 50 billion in first 10 years + USD 50 billion in next 5 years).
  • Expected to generate 1 million jobs.
  • Excludes foreign portfolio investment (FPI); sovereign wealth funds exempted.
  • India can withdraw tariff concessions if commitments are not met.
• Market Access & Tariff Concessions
  • EFTA: 92.2% tariff lines offered, covering 99.6% of India’s exports (100% non-agri products + concessions on processed agri products).
  • India: 82.7% tariff lines offered, covering 95.3% of EFTA exports (including gold, which retains existing duty).
  • Duty-free access: Indian basmati and non-basmati rice exports, without reciprocity.
  • Exclusions: Dairy, soya, coal, and sensitive agri products; protection given to sectors linked with PLI schemes (e.g., pharma, medical devices, processed food).
  • Concessions: Cheaper Swiss chocolates, wines, luxury watches (though wines < USD 5 excluded to protect Indian wineries).
• Services & Professional Mobility
  • Boosts Indian services exports: IT, business, cultural, sporting, educational, and audiovisual services.
  • Mutual Recognition Agreements (MRAs): Nursing, accountancy, and architecture professionals to gain work access in EFTA countries.
• Legal & Institutional Framework
  • Covers 14 chapters: market access, trade facilitation, investment promotion, IPR, sustainable development.
  • Protects India’s generic medicines; prevents evergreening of patents.
  • Promotes technology collaboration but not compulsory technology transfer.

About the European Free Trade Association (EFTA)

• Established: 1960 (Stockholm Convention).
• Members: Iceland, Liechtenstein, Norway, Switzerland (not part of the EU).
• Aim: Promote free trade and economic integration among members and global partners.

India–EFTA Trade Relations

• India is EFTA’s 5th largest trading partner (after EU, US, UK, China).
• Trade Volume (2024–25): USD 24.4 billion.
  • India’s exports: USD 1.96 billion (chemicals, iron & steel, precious stones, sports goods, bulk drugs).
  • Imports from EFTA: USD 22.45 billion (mainly gold, silver, coal, pharma, vegetable oil, medical equipment, dairy machinery).
• Deficit: Large trade deficit, primarily due to gold imports from Switzerland (USD 20.7 billion in 2021–22).
• India–EFTA Desk: Set up by Invest India as a single-window platform to facilitate investments under TEPA.