In a historic move towards bolstering international trade and economic integration, India has inked a groundbreaking Trade and Economic Partnership Agreement (TEPA) with the European Free Trade Association (EFTA) on March 10th, 2024. Spearheaded by Shri Piyush Goyal, Minister of Commerce and Industry, Food and Consumer Affairs, and Textiles, this modern and ambitious agreement marks India's first Free Trade Agreement (FTA) with four developed nations, comprising Switzerland, Iceland, Norway, and Liechtenstein.
At the core of this agreement lies a remarkable commitment: EFTA has pledged to promote investments aiming to surge India's foreign direct investments by a staggering USD 100 billion over the next 15 years. This visionary pact doesn't stop there; it also aims to pave the way for the creation of 1 million direct jobs within India through these investments, setting a new benchmark in FTA history.
The significance of this agreement extends far beyond mere numbers. EFTA's generous offer encompasses 92.2% of its tariff lines, covering an impressive 99.6% of India's exports. In return, India has reciprocated by offering 82.7% of its tariff lines, encompassing 95.3% of EFTA exports. Notably, India has ensured that sensitive sectors such as pharmaceuticals, medical devices, processed food, dairy, soya, and coal remain safeguarded.
In a groundbreaking move, TEPA delves into uncharted territories by making a legal commitment to promote target-oriented investments and the creation of jobs, a first in FTA history. This agreement not only unlocks doors to large European and global markets for Indian exporters but also provides a window for EFTA nations to access India's vast market.
The scope of TEPA is broad and comprehensive, covering 14 chapters with a primary focus on crucial aspects such as market access for goods, rules of origin, trade facilitation, intellectual property rights, and sustainable development. It also includes provisions for Mutual Recognition Agreements in Professional Services, underscoring the commitment to fostering a conducive environment for trade and investment.
One of the standout features of TEPA is its emphasis on services exports, particularly in sectors where India holds key strengths, such as IT services, business services, education services, and more. EFTA's offers in services include improved access through digital delivery, commercial presence, and enhanced commitments for entry and temporary stay of key personnel.
TEPA isn't just about trade; it's a catalyst for 'Make in India' and 'Atmanirbhar Bharat' initiatives, bolstering domestic manufacturing across sectors like infrastructure, manufacturing, pharmaceuticals, chemicals, and more. This agreement is a gateway to integrating into EU markets, with Switzerland serving as a potential base for Indian companies to expand their reach.
In addition to its economic implications, TEPA signals India's commitment to sustainable development, inclusive growth, social development, and environmental protection. It fosters transparency, efficiency, simplification, and harmonization of trade procedures, setting a high standard for international agreements.
As we embark on this new era of economic collaboration, TEPA stands as a testament to India's progressive vision and its dedication to fostering a vibrant, globally connected economy. With a promise of $100 billion in investments and 1 million jobs, this agreement not only unlocks economic opportunities but also signifies a landmark moment in the history of India's trade relations with EFTA nations.
This Article has been Compiled by Divyansh Jaiswal (Senior Associate)
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can direct your queries or comments to the author at divyansh@factumlegal.com
