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India inks FTA with 4 European nations

Published: 14th Mar, 2024

Context

India has signed a free trade agreement (FTA) with a group of four European countries that are not members of the European Union.

1: Dimension- Significance of the deal for India

  • Investment opportunity: The deal with the European Free Trade Association (EFTA) will see investments in India of USD 100bn (£77.8bn). The investments do not cover foreign portfolio investment.
  • Major range of investment: Under this deal, India will lift most import tariffs on industrial goods from the four countries in return for investments over 15 years. The investments are expected to be made across a range of industries, including pharmaceuticals, machinery and manufacturing.
  • Better market access: The agreement enhances market access and simplifies customs procedures making it easier for Indian and EFTA businesses to expand their operations in the respective markets.
  • Boost to Make in India: The agreement will give a boost to Make in India and provide opportunities to young & talented workforce. The FTA will provide a window to Indian exporters to access large European and global markets.
  • A show for UK: The announcement comes as the UK and India have been holding negotiations over an FTA for the last two years. In the last two years, India has signed trade deals with Australia and the United Arab Emirates.

2: Dimension- Major Takeaways

  • For the first ever time in the history of FTAs, a legal commitment is being made about promoting target-oriented investment and creation of jobs.
  • EFTA is offering2% of its tariff lines which covers 99.6% of India’s exports. The EFTA’s market access offer covers 100% of non-agri products and tariff concession on Processed Agricultural Products (PAP).
  • India is offering7% of its tariff lines which covers 95.3% of EFTA exports of which more than 80% import is Gold. The effective duty on Gold remains untouched. Sensitivity related to PLI in sectors such as pharma, medical devices & processed food etc. have been taken while extending offers. Sectors such as dairy, soya, coal and sensitive agricultural products are kept in exclusion list.

Fact Box: EFTA

  • EFTA is an inter-governmental organization set up in 1960 for the promotion of free trade and economic integration for the benefit of its four Member States.
  • The EFTA is made up of Norway, Switzerland, Iceland and Liechtenstein.
  • EFTA is one important economic block out of the three (other two - EU &UK) in Europe. Among EFTA countries, Switzerland is the largest trading partner of India followed by Norway.
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