Investment worth $100 billion over 15 years will be tied with the trade agreement between India and the four-member European Free Trade Association (EFTA), to be signed on Sunday, according to people aware of the matter.
The investment will be linked to the creation of one million jobs in India.
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“A mechanism and a road map will be developed to achieve that kind of investment,” one of the persons cited above told Business Standard.
The commitment is likely to be part of the investment chapter in the proposed trade agreement and not a separate investment pact.
A team of officials from the EFTA nations — Iceland, Switz-erland, Norway, and Liechtenstein — is expected in New Delhi over the weekend for an official signing of the Trade and Economic Partnership Agreement (TEPA). This is the first trade deal India is set to sign with any European nation or bloc and the fourth trade agreement that will be signed over a decade.
A free-trade agreement with Mauritius was signed in February 2021, followed by those with the United Arab Emirates (UAE) and Australia a year later.
Under the TEPA, both countries are expected to give duty-free access to items across various sectors. For India, the biggest win will be a commitment for the $100 billion investment. This is because import duties in the EFTA nations aren’t steep. As a result, for India, market access gains could be limited.
India and the EFTA nations had launched negotiations on a broad-based trade and investment agreement more than 15 years ago. As many as 13 rounds of negotiations were held, after which talks were suspended in 2013.
Talks resumed in 2016 and four more rounds of negotiations took place, and finally again in 2023. The last or the 21st round of talks took place during January 8-13 in New Delhi. Of all the four EFTA nations, Switzerland is India’s largest trading partner. Last financial year, India’s trade with EFTA countries resulted in a substantial trade deficit In FY23, India’s trade deficit with EFTA stood at $14.8 billion.
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Exports and imports stood at $1.9 billion and $16.7 billion, respectively. The trade deficit can be attributed to high gold import from Switzerland.
Cabinet note on India-Oman FTA in the works
The commerce department is in the process of finalising a Cabinet note for an approval of a free-trade agreement (FTA) between India and Oman, people aware of the matter said. India is keen to finalise the trade pact before the model code of conduct (MCC) kicks-in ahead of its general elections. The MCC is expected to be announced early next week.
The much-awaited trade agreement between India and the United Kingdom (UK) may not be finalised before the MCC kicks in, although officials said the deal had been substantially concluded, even as some fine-tuning may be required. With the MCC a few days away, an announcement and signing of the trade deal at a ministerial level may be difficult.