India-EFTA Trade & Economic Partnership Agreement (TEPA) – Explained Pointwise

The India-EFTA Trade and Economic Partnership Agreement (TEPA) is a comprehensive trade agreement between India and Switzerland, Norway, Iceland and Liechtenstein. It was signed on 10 March 2024 and entered into force exactly one year ago, on 1 October 2025. PM Narendra Modi had termed the signing of the trade pact as a ‘watershed moment‘ in India-EFTA relations.

What is India-EFTA TEPA?

• It is a trade deal signed between-India & four European countries (Members of EFTA)- Iceland, Liechtenstein, Norway and Switzerland.

European Free Trade Association (EFTA):

• EFTA is an intergovernmental organisation of 4 European countries that promotes free trade and economic integration among its members and with other countries.
• Members: Switzerland, Norway, Iceland and Liechtenstein
• Members are not part of the European Union (EU).
• EFTA negotiates free trade agreements (FTAs) with countries and regional blocs around the world.

Economic Significance of EFTA Bloc:

1. EFTA countries have a combined GDP of over $1 trillion.
2. EFTA nations are the world’s ninth-largest merchandise trader and its fifth largest in commercial services.
3. India is the EFTA’s fifth-largest trading partner after the European Union, the United States, Britain and China.
4. EFTA is among the most important trading partners in goods and services for the EU.

Objectives of the Deal:

1. EFTA nations have committed to invest $100 billion in India in 15 years. ($50 bn in the first 10 years and $10 bn in the next 5 years).
2. It aims to create 1 million direct jobs within 15 years.
3. It aims to eliminate/reduce tariffs and non-tariff barriers on a wide range of products and create opportunities for trade and investment between India and EFTA.
4. It aims to ensure fair and transparent market access conditions for service providers and investors. It will also enhance cooperation on intellectual property rights protection and enforcement.
5. TEPA aims to establish effective mechanisms for dispute resolution.

What was the Status of India-EFTA Trade Relations before TEPA?

1. Trade Deficit of India with EFTA countries: India has a huge trade deficit with the countries in EFTA. In 2023, India-EFTA bilateral trade was around $25 billion. India’s exports to the EFTA touched $2.8 billion and imports were about $22 billion during that period.
2. India-EFTA trade Merchandise Trade: In 2022-23, the combined EFTA-India merchandise trade stood around $6.1 billion. The main imports into EFTA States from India consisted of organic chemicals (27.5%). The main imports into India from EFTA consisted of Machinery (17.5%) and pharmaceutical products (11.4%).
3. Investment and Trading Partners:
   1. EFTA investment stood at $10.7 billion in 2022.
   2. Switzerland is India’s largest trading partner in EFTA, followed by Norway. Switzerland accounts for 91% of trade between India and EFTA.
4. High tariffs on EFTA goods: Goods arriving from the EFTA group face high tariffs. For e.g. India levies an import duty of 20% on Swiss watches and 30% on chocolates from European countries.

What are the features of India-EFTA TEPA?

1. Tariff Reduction: India has offered 83% of its tariff lines, which covers 95.3% of the EFTA grouping’s exports. This eliminates duties on most of industrial goods like Swiss watches, pharmaceutical products, fertilizers, chocolates, minerals, textiles, smartphones, iron and steel products.
2. Enhanced Market Access: EFTA has offered concessions on 92.2% of tariff lines, covering about 99.6% of India’s exports to EFTA. It provides 100% coverage of non-agricultural products along with concessions for processed agricultural products.
3. Greater Access to Services: India has commitments across 105 services sub-sectors, while EFTA countries have made commitments covering more than 100 sub-sectors each. Opportunities are enhanced in IT, business services, education, audio-visual services and professional services.
4. Investments and Technology Transfers: IThe agreement seeks to promote cooperation in precision engineering, health sciences, renewable energy, innovation and R&D. It can facilitate technology partnerships, joint ventures and integration into global value chains..
5. Collaboration in Infrastructure Sector: Swiss transport companies to collaborate in the development and advancement of the Railways. Collaboration with Flughafen Zürich AG, the operator of the Zürich airport for improved air-transport connectivity.
6. Investment and employment commitment: EFTA countries aim to increase FDI into India by $100 billion over 15 years ($50 billion in the first 10 years and another $50 billion in the next five). The agreement also aims to facilitate 1 million direct jobs in India. This is a distinctive feature because investment and job creation are directly linked to the trade agreement.
7. Protection of sensitive Indian sectors: India has maintained protection for sensitive sectors such as dairy, soya, coal and certain agricultural products. Tariff reductions for some strategically important products are phased over 5, 7 or 10 years.
8. Professional Mobility: TEPA facilitates greater certainty regarding the temporary entry and stay of key personnel involved in services. It also provides for Mutual Recognition Agreements (MRAs) in professions such as nursing, architecture and chartered accountancy.

What is the Significance of India-EFTA TEPA?

1. Boosts India’s exports: The India-EFTA TEPA provides Indian exporters with preferential access to high-income EFTA markets by reducing or eliminating tariffs on a wide range of products. This can improve the price competitiveness of Indian products, diversify export destinations and strengthen India’s integration into global value chains.
2. Comprehensive Trade Pact: India-EFTA TEPA is a wide-ranging agreement which delves into a multitude of issues that would be crucial to economic ties in the coming decade. It covers labour issues, human rights, apart from the trade in goods and services, strong rules of origin clause and strong intellectual property rights (IPR). It is India’s second most comprehensive trade pact after its pact with the UAE.
3. Template for other Trade Agreements: ‘Behind-the-border‘ requirement included in the India-EFTA TEPA is a condition that lowering of tariffs must be complemented with mobilization of large-scale investment by the EFTA countries. This could serve as a template when India negotiates trade agreements with other developed countries.
4. Better Prices for Indian Middle Class Customers: The reduced tariff rates would lower the prices on seafood such as tuna and salmon, Swiss chocolate, biscuits, watches, medical equipment, and energy drinks. Indian incomes are set to rise by 70% by 2030 to breach a per-capita level of $4,000 (Standard Chartered Report).
5. Enhanced cooperation in service sector: The agreement would help to stimulate services exports in areas such as information technology, audio-visual capabilities and facilitate the movement of key skilled personnel.
6. Facilitate Technology Transfer: The technology transfer as part of the India-EFTA deal will increase India’s productivity and export competitiveness in agricultural sector, renewable sector, pharmaceutical, garments, and medical instruments.
7. Employment Generation: The increased trade and investment opportunities due to TEPA will help to generate ~1 million jobs in direct employment, particularly in the manufacturing and services sectors.
8. Increased Investment opportunities: The trade deal aims to spur financial investment in India through Switzerland’s banking sector, Norway’s sovereign wealth fund and Liechtenstein’s ESG (environment, social, governance) investing sector.
9. Diversification of India’s trade: Stronger economic engagement with EFTA provides India with additional European economic partners beyond its existing major trading relationships. It also contributes to India’s strategy of building multiple and resilient supply-chain partnerships.

What are the challenges associated with TEPA?

1. Trade imbalance: A major challenge is the possibility of a persistent trade imbalance in favour of EFTA countries, particularly given their strength in high-value sectors such as pharmaceuticals, precision engineering, machinery, chemicals and financial services. Greater Indian market access could increase imports from these technologically advanced economies faster than India’s exports grow.
2. Limited export capacity: Indian MSMEs may struggle to fully utilise preferential market access because of limitations in scale, technology, quality standards and certification.
3. No reduction on Gold Tariffs: Gold Trade is the biggest component of trade between India-EFTA (Out of the $19 billion India-EFTA trade, $13 billion was just gold imports from Switzerland). Since no real tariff benefits are being offered on gold, the impact of the deal is limited to the remaining $6-7 billion bilateral trade.
4. Switzerland’s policy of tariff-free entry: Switzerland’s policy of tariff-free entry for all industrial goods from any country would affect benefits to Indian companies.
5. Non-tariff Barriers: The presence of non-tariff barriers in Switzerland, like quality standards and approval requirements, would affect India’s agricultural exports to Switzerland.
6. Exclusion of Agricultural Products: Sensitive agricultural items like dairy, soya have been kept in the exclusion list.
7. Uncertainty over investment commitment: The $100-billion investment objective is substantial, but converting the commitment into actual investment will depend on the investment climate, project viability and business conditions in India.

What Should be the Way Forward?

1. Maximise utilisation of tariff preferences: India should ensure that exporters, particularly MSMEs, are fully aware of the tariff concessions available under TEPA and the procedures for claiming them. Export promotion bodies should also identify products with high demand in EFTA markets and help firms meet their quality, packaging, traceability and regulatory requirements.
2. Address non-tariff barriers: India should strengthen its testing, certification and quality-control infrastructure to help exporters comply with EFTA’s stringent technical, sanitary, environmental and sustainability standards.
3. Facilitate EFTA investment: India should create a predictable and investor-friendly business environment by simplifying regulatory procedures, ensuring faster clearances, improving infrastructure and reducing compliance costs.
4. Ensure investment translates into employment: India should establish transparent monitoring and accountability mechanisms to ensure that the investment envisaged under TEPA translates into tangible employment outcomes. Investments can be directed towards labour-intensive manufacturing, MSMEs, skill development and emerging sectors such as clean technology and advanced manufacturing.
5. Proactive Measures: Proactive measures such as Establishment of Dispute Resolution Mechanisms, establishment of EFTA offices to fully reap the benefits of India-EFTA TEPA.
6. Strong Political Involvement and Guidance: Strong political involvement and guidance must be provided for fructification of the TEPA agreement between the two parties.

Conclusion: The success of TEPA will depend not merely on tariff concessions but on India’s ability to improve domestic competitiveness, reduce compliance costs, strengthen MSMEs and convert the investment and employment objectives into actual economic outcomes,