India’s free trade agreement (FTA) with the European Free Trade Association (EFTA) bloc will officially come into force on October 1, 2025. The deal not only promises major economic benefits but also, for the first time in India’s trade history, introduces legally binding sustainability provisions covering environment, labour, and human rights.
Key Features of the Agreement
- EFTA Bloc Members: Iceland, Liechtenstein, Norway, and Switzerland.
- Signed On: March 10, 2024, as the Trade and Economic Partnership Agreement (TEPA).
Investment Commitment
- USD 100 billion over 15 years.
- USD 50 billion in the first decade and USD 50 billion in the following five years.
- Expected to generate 1 million direct jobs in India.
Market Access
- India grants Switzerland improved access for 94.7% of its exports (2018–2023, excluding gold).
- Products include pharmaceuticals, machinery, optical instruments, watches, chocolates, and processed agricultural goods.
- India reduces/eliminates duties on Swiss watches, chocolates, and cut & polished diamonds.
Sustainability Clause
A unique feature of this FTA is its sustainability framework,
- Provisions ensure environmental protection, labour rights, and social welfare are not compromised.
- Both sides reaffirm commitments to international agreements on trade, environment, and human rights.
- Enhances predictability and legal certainty in trade relations.
Strategic Importance for India
- First trade agreement to include such a large investment pledge.
- Helps India attract long-term capital to boost industries and job creation.
- Improves India’s integration into global value chains for high-end products like pharmaceuticals, machinery, and precision instruments.
- Aligns India’s trade policy with sustainable development goals (SDGs).
Important Takeaways for Exam
- India signed a Trade and Economic Partnership Agreement (TEPA) with the European Free Trade Association (EFTA).
- EFTA countries include Switzerland, Iceland, Norway, and Liechtenstein.
- EFTA was established in 1960 under the Stockholm Convention by seven founding member states.
- The purpose of EFTA is to promote free trade and economic integration among its members.