{"id":373072,"date":"2026-10-01T18:55:04","date_gmt":"2026-10-01T13:25:04","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=373072"},"modified":"2026-10-01T18:55:04","modified_gmt":"2026-10-01T13:25:04","slug":"the-india-efta-partnership-one-plus-one-equals-three","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/the-india-efta-partnership-one-plus-one-equals-three\/","title":{"rendered":"The India\u2013EFTA Partnership: One Plus One Equals Three"},"content":{"rendered":"

UPSC Syllabus: Gs Paper 2- <\/strong>International Relations<\/p>\n

Introduction<\/strong><\/h2>\n

One year after the Trade and Economic Partnership Agreement (TEPA) between India and the European Free Trade Association (EFTA) entered into force, its importance goes beyond tariff reduction. The agreement combines market access with investment, employment, services, technology and sustainable development. Its wider potential is visible through Iceland\u2019s experience in geothermal energy, carbon management and fisheries, while Arctic cooperation adds another dimension. Thus, TEPA can develop from a trade agreement into a broader economic and knowledge partnership.<\/p>\n

Understanding EFTA and TEPA<\/strong><\/h2>\n
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  1. EFTA as a European economic bloc:<\/strong> European Free Trade Association (EFTA)<\/strong> is an intergovernmental organisation of Iceland, Liechtenstein, Norway and Switzerland<\/strong>, established in 1960 by seven Member States<\/strong> to promote free trade and economic integration.<\/li>\n
  2. EFTA\u2019s position in Europe:<\/strong> EFTA is one of the three important economic blocs in Europe<\/strong>, alongside the European Union (EU) and the United Kingdom (UK)<\/strong>, giving its members a separate platform for economic cooperation.<\/li>\n
  3. TEPA\u2019s origin and status:<\/strong> India and EFTA signed Trade and Economic Partnership Agreement (TEPA)<\/strong> in March 2024 in New Delhi<\/strong>, and the agreement entered into force in October 2025<\/strong>.<\/li>\n<\/ol>\n
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    • India\u2019s first FTA with these countries:<\/strong> TEPA is India\u2019s first Free Trade Agreement with four developed European nations<\/strong>, namely Switzerland, Norway, Iceland and Liechtenstein.<\/li>\n
    • Comprehensive framework:<\/strong> TEPA contains 14 chapters<\/strong> covering goods, rules of origin, trade facilitation, trade remedies, sanitary and phytosanitary measures, technical barriers, services, investment, Intellectual Property Rights and sustainable development.<\/li>\n<\/ul>\n

      Key Features of TEPA<\/strong><\/h2>\n
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      1. Extensive market access:<\/strong> EFTA offered concessions on 2% of tariff lines<\/strong>, covering 99.6% of the value of India\u2019s exports<\/strong>, while India offered concessions on 82.7% covering 95.3% of EFTA exports.<\/li>\n
      2. Investment commitment:<\/strong> EFTA states have committed to increase FDI in India by $50 billion in the first 10 years<\/strong> and another $50 billion in the next five years<\/strong>.<\/li>\n
      3. Employment commitment:<\/strong> The investment framework aims to facilitate one million direct jobs in India<\/strong> and create stronger links between Indian skills and European technology ecosystems.<\/li>\n
      4. Investment facilitation:<\/strong> The India\u2013EFTA Desk<\/strong>, operational since February 2025, acts as a single-window platform and promotes investment, joint ventures and SME cooperation.<\/li>\n
      5. Protection of sensitive sectors:<\/strong> India excluded dairy, soya, coal, pharmaceuticals, medical devices and selected food products, while some Make in India and Production Linked Incentive (PLI) products receive phased tariff reductions over 5\u201310 years<\/strong>.<\/li>\n
      6. Services and professional mobility:<\/strong> India has made commitments in 105 services sub-sectors<\/strong>, while EFTA offers cover 128 from Switzerland, 114 from Norway, 110 from Iceland and 107 from Liechtenstein.<\/li>\n
      7. Mutual recognition and IPR:<\/strong> TEPA includes Mutual Recognition Agreement (MRAs)<\/strong> for professions such as nursing, chartered accountancy and architecture, while its IPR provisions retain India\u2019s flexibility on public health and generics.<\/li>\n<\/ol>\n

        Sectoral Impact and Opportunities for India<\/strong><\/h2>\n
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        1. Agriculture and allied products:<\/strong> India\u2019s exports to EFTA were valued at $72.37 million in FY2024\u201325<\/strong>, with guar gum, processed vegetables, basmati rice, pulses, fruits and grapes among the major products.<\/li>\n
        2. Coffee and tea:<\/strong> EFTA countries import around $175 million of coffee<\/strong>, while zero duty on coffee lines improves access; India\u2019s average tea export realisation increased from $5.93\/kg to $6.77\/kg<\/strong> in 2024\u201325.<\/li>\n
        3. Marine products:<\/strong> Norway provides duty exemption of up to 16%<\/strong> on fish and shrimp feed, while Iceland eliminates tariffs up to 10% on several seafood products and reduces fish-feed tariffs by up to 55%.<\/li>\n
        4. Engineering and manufacturing:<\/strong> Engineering exports reached $315 million in FY2024\u201325<\/strong>, up 18% year-on-year, with opportunities in electric machinery, copper products, energy-efficient systems and precision engineering.<\/li>\n
        5. Textiles and consumer goods:<\/strong> Textiles, apparel, leather, footwear, sports goods and toys gain from duty stability, zero-duty access or simpler standards and conformity arrangements.<\/li>\n
        6. Chemicals and allied products:<\/strong> EFTA has provided zero or reduced tariffs on 95% of India\u2019s chemical exports<\/strong>, while selected exports are projected to increase from $49 million to $65\u201370 million<\/strong>.<\/li>\n
        7. Electronics and software:<\/strong> The investment commitment and access to high-income European markets can support Indian electronics firms, MSMEs and Original Equipment Manufacturer (OEMs) seeking to expand internationally.<\/li>\n<\/ol>\n

          Iceland and India: Geothermal Energy and Energy Security<\/strong><\/h2>\n
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          1. Geothermal expertise:<\/strong> Iceland has nearly a century of experience in the direct use of low- and medium-temperature geothermal heat, beyond electricity generation.<\/li>\n
          2. Indian agricultural applications:<\/strong> Geothermal drying and cooling can help Indian farmers process produce and avoid being forced to sell immediately during harvest.<\/li>\n
          3. Himalayan applications:<\/strong> India’s Himalayan geothermal belt can draw on Icelandic experience for direct-use applications.<\/li>\n
          4. High-altitude energy security:<\/strong> Direct geothermal heat can provide energy to northern high-altitude communities and installations without depending on fuel supply lines that may close for months.<\/li>\n<\/ol>\n

            Iceland and India: CCUS and the Blue Economy<\/strong><\/h2>\n
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            1. India’s CCUS potential:<\/strong> NITI Aayog estimated that India could capture around 750 million tonnes of CO<\/strong>\u2082 annually by 2050<\/strong>, while national Carbon Capture, Utilisation and Storage (CCUS)<\/strong> research is moving towards commercial applications.<\/li>\n
            2. Carbon storage:<\/strong> CarbFix has demonstrated that more than 95% of injected CO<\/strong>\u2082 can turn into stone within two years<\/strong>, with India’s Deccan Trap basalts offering similar geological characteristics.<\/li>\n
            3. Carbon utilisation:<\/strong> Iceland’s experience in converting captured CO\u2082 into methanol can support Indian e-methanol projects, including the proposed 3,00,000-tonne-a-year project in Raigad<\/strong>.<\/li>\n<\/ol>\n