India Signs Free Trade Agreement With EFTA Countries

Context: 

India and the EFTA Countries are likely to sign a long-negotiated bilateral free trade agreement aimed at increasing trade and investment flows, job creation, and economic growth.

India EFTA Free Trade Agreement

• This is the first FTA for India where it has been able to get a commitment on investment and employment from the partner nations.
• The EFTA countries are looking at investing in joint ventures in areas such as pharmaceuticals, especially medical devices, certain chemicals, food processing, and engineering products.

About EFTA Countries| European Free Trade Association

• Intergovernmental Organisation: The European Free Trade Association is an intergovernmental organization set up to promote free trade and economic cooperation between its members, within Europe and globally.
  • Aim: Deeper economic integration among its members, including a common customs union.
• Member States: It has four member states: Iceland, Liechtenstein, Norway, and Switzerland.
  • These countries are all open, competitive economies committed to the progressive liberalization of trade in the multinational arena as well as in free trade agreements.
• Historical Background: ETFA was founded by the Stockholm Convention in 1960 as an alternative to the European Economic Community (EEC), the European Union (EU) precursor.
• Advisory Bodies: The EFTA Parliamentary Committee (PC) and the EFTA Consultative Committee (CC) are two important bodies to the EFTA Council.

• • EFTA Council: It is the highest governing body of EFTA. The Council usually meets eight times a year at the ambassadorial level and twice a year at the Ministerial level.
  • EFTA Secretariat: The Headquarters in Geneva deals with the management and negotiation of free trade agreements with non-EU countries, and provides support to the EFTA Council.

Implications of India EFTA Trade and Economic Partnership Agreement

• Increased Trade: 

• • Reduced tariffs and quotas on goods and services will likely lead to a significant increase in trade between India and the EFTA countries.

• Investment Opportunities: 

  • The agreement might encourage more foreign direct investment (FDI) from EFTA countries into India leading to the creation of new businesses, technology transfer, and infrastructure development in India.
    • The proposed free trade agreement is expected to lead to a flow of investments worth $100 billion from the four-country bloc into India over the next 15 years generating an estimated one million jobs.

• Improved Efficiency: 

• • Streamlined customs procedures and regulations could make trade between India and EFTA countries more efficient and less time-consuming, benefiting businesses on both sides.

• Bringing Down the Trade Deficit: 

  • The trade pact with EFTA is also likely to bring down the huge trade deficit India has with the bloc.
    • India’s export to the EFTA block in 2023 was at $1.87 billion, with items such as chemicals, pharmaceuticals, apparel and pearls, and precious and semi-precious stones, dominating the export basked.
    • On the other hand, it imported goods worth $20.45 billion from the EFTA in 2023 with inflows of pearls, precious or semi-precious stones, precious metals, and coins valued at $16.7 billion.

• India FTA Negotiation with Other Countries: 

  • The signing of the India-FTA TEPA is likely to give a boost to India’s ongoing FTA negotiations with other partners such as the EU and the UK.
    • It would indicate that it was possible to close deals with India.

News Source: The Hindu and EFTA

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