Source: The post is based on the article “Economic pact between India and EFTA states will further boost trade, investment” published in The Indian Express on 1st May 2023.
Syllabus: GS 3 – Growth & Development
Relevance: benefits of Trade and Economic Partnership Agreement (TEPA) with European Free Trade Association (EFTA) for India.
News: High-level delegations from the European Free Trade Association (EFTA) states and India met in New Delhi to consider the possibility of beginning discussions on a Trade and Economic Partnership Agreement (TEPA).
About European Free Trade Association (EFTA)
European Free Trade Association (EFTA) include four countries – Iceland, Liechtenstein, Norway and Switzerland. It is a regional trade organization.
These are small countries. However, their economy is strong enough that makes them the 10th largest merchandise traders and eighth largest services traders worldwide.
Today, the four nations rank among the highest in the world in innovation, competitiveness, wealth creation per inhabitant, life expectancy, and quality of life.
EFTA companies are also world leaders in pharmaceuticals, biotechnology, machinery manufacturing, R&D-driven technology products, geothermal-related technologies and many more.
EFTA has a track record of negotiating mutually beneficial trade agreements, with a total of 29 free trade agreements (FTAs) with 40 partner nations. Nearly 22 percent of EFTA states’ imports come from these FTA partners.
Therefore, a TEPA between EFTA states and India will benefit both the parties.
How will the Trade and Economic Partnership Agreement (TEPA) with EFTA states benefit both the parties?
First, The EFTA nations can complement and support India’s economic development and leadership in the development of green technology by fostering trade and investment ties.
A trade agreement would benefit both sides by promoting technology and knowledge transfer, facilitating R&D and innovation, and encouraging business collaboration across different areas.
Furthermore, improved market access for goods will boost India’s export potential to EFTA markets.
Second, EFTA states have contributed investments of over $35 billion in India. These investments are done across sectors such as machinery, electrical engineering and metals, etc. Hence, a trade pact is estimated to increase investments in India.
Third, EFTA and India have a mutually beneficial relationship in skilled labour. For instance, the EFTA states gain from the highly skilled Indian workforce in the services sector, while India benefits from over 400 companies established by EFTA states, generating more than 150,000 jobs.
India also consistently ranks first in terms of work permits issued to non-EU citizens in Switzerland.
Therefore, a trade agreement between EFTA and India would increase predictability in the services sector, creating more business opportunities for skilled Indian service providers.
Fourth, EFTA states and India can collaborate on green growth. India aims to meet 50 percent of its energy needs with renewables by 2030. Therefore, EFTA states can contribute to India’s green growth aspirations by scaling up projects and cooperation in solar, wind, hydro and geothermal power.
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