India-EFTA TEPA Deal: A Landmark $100 Billion FTA

Relevance: GS III Economics

An important turning point in India’s quest for greater international economic integration was reached in March 2024 with the signing of the India-EFTA Trade and Economic Partnership Agreement (TEPA). This Free Trade Agreement with the European Free Trade Association (EFTA), which includes Switzerland, Norway, Iceland, and Liechtenstein, is valued at a potential $100 billion in investment and promises more than 1 million direct jobs. It goes beyond conventional tariff liberalization. It is a strategic partnership that strengthens India’s position as a major actor in the changing global trade architecture and is based on long-term investment commitments, supply chain diversification, and regulatory cooperation.

Important TEPA Provisions

First Binding Commitment: The first free trade agreement (FTA) binds India to a $100 billion investment (FDI) and one million direct jobs over the following 15 years.

• India will grant reduced or zero levies on a number of products in exchange, including Swiss watches, chocolates, and cut and polished diamonds. EFTA’s market access offer includes a tariff reduction on Processed Agricultural Products (PAP) and 100% on non-agri products.
• The exclusion list includes industries including dairy, soy, coal, and delicate agricultural items.
• Tariff Reduction: For 99.6% of India’s exports, EFTA will remove or lower import duties. On 95.3% of exports from EFTA countries, India will remove or lower import duties.
• Others: Professional services mutual recognition agreements and IPR obligations For instance, nursing

Trade relations between India and EFTA

In 2024–2025, trade between India and EFTA was USD 24.4 billion; India has a significant trade imbalance, with imports of gold from Switzerland accounting for a significant portion of the gap. 

• Norway is India’s second-largest trading partner among EFTA nations, after Switzerland.

About the EFTA (European Free Trade Association) 

It is an intergovernmental organization that works to advance its members’ economic integration and free trade.

• Member States: Norway, Iceland, Switzerland, and Lichtenstein (not EU members)
• In 1960 by the Stockholm Convention, which included Austria, Denmark, Great Britain, Norway, Portugal, Sweden, and Switzerland as its seven founding members.

Mains:

Question: Critically examine the significance of the Trade and Economic Partnership Agreement (TEPA) between India and EFTA in furthering India’s economic diplomacy and trade diversification strategy.

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Mains PYQs:

Question: How would the recent phenomena of protectionism and currency manipulations in world trade affect macroeconomic stability of India? (UPSC IAS 2018)

MCQs

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Question: With reference to the Trade and Economic Partnership Agreement (TEPA) signed in 2024 between India and EFTA, consider the following statements:

1. It is the first FTA in which India has made a binding commitment of $100 billion FDI in the next 15 years.
2. The agreement includes Mutual Recognition Agreements in professional services such as nursing.
3. India agreed to eliminate or reduce tariffs on 100% of exports from EFTA nations.
4. Sectors such as dairy, soya, and coal are included in the tariff concession list.

Which of the statements given above are correct?

1. 1 and 2 only
2. 1, 2 and 3 only
3. 1, 2 and 4 only
4. 1, 3 and 4 only

Answer: A

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