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Source-This post on The India-EFTA trade deal: A win-win proposition on various dimension has been created based on the article “The India-EFTA trade deal: It is a win-win on various dimensions” and “India should focus on bringing technology” published in “Mint” and “Business Standard” on 12 March 2024.
UPSC Syllabus-GS Paper-2-International relations- Bilateral, Regional and Global Groupings and Agreements involving India and/or affecting India’s interests.
News-The article discusses the provisions and significance of India-EFTA trade deal.
Context– India has recently signed a free trade agreement (FTA) with four European countries-Iceland, Liechtenstein, Norway, and Switzerland.
What is the European Free Trade Association (EFTA)?
The European Free Trade Association (EFTA) is an intergovernmental organization set up for the promotion of free trade and economic integration to the benefit of its four Member States – Iceland, Liechtenstein, Norway, and Switzerland – and the benefit of their trading partners around the globe.
These are very high-income countries and have a strong position in certain supply chains. For ex-in the world of finance, both Switzerland (through its banking sector) and Norway (through its sovereign wealth fund) have a disproportionate influence.
Liechtenstein has an innovative financial sector, particularly when it comes to ESG (environment, social, governance) investing.
Read more- European Free Trade Association (EFTA)
What is India-EFTA trade dynamics?
As shown in the table, India has a consistent trade deficit with all the 4 EFTA countries. Switzerland is India’s largest trade partner among the groups 4 members.
What is the significance of India-EFTA trade deal for India?
1) Boost to trade opportunities -It will empower Indian exporters access to specialized inputs and create conducive trade and investment environment. This would boost exports of Indian made goods as well as provide opportunities for services sector to access more markets.
2) India- EU markets integration-Over 40% of Switzerland’s global services exports are to the EU.Indian companies can look to Switzerland as a base for extending its market reach to EU.
3) Strengthening Make in India and Atmanirbhar Bharat- It will encourage domestic manufacturing in various sectors like Infrastructure and connectivity, manufacturing, machinery, pharmaceuticals, chemicals, Food Processing etc.
4) Technology Transfer-EFTA countries could help India integrate cutting-edge technological advancements in its manufacturing, agriculture and service sectors. It could also help India in production of green energy.
5) Win-win proposition– EFTA countries have cutting-edge technology. However, they lack scale. India can provide scale to these countries.
6) Serves as a template– India has innovated by including a different kind of “behind-the-border” requirement in its deal with EFTA countries. It has conditioned the lowering of tariffs on the mobilization of largescale investment by the EFTA countries. This could serve as a template when India has to negotiate trade agreements with other developed countries.
Question for practice
What is the significance of recently concluded India-EFTA trade deal for India?
