Swiss wines and chocolates are set to become cheaper in India after a new trade agreement it signed with a bloc of four European nations came into effect on Wednesday.
India signed the Trade and Economic Partnership Agreement (TEPA) with the European Free Trade Association (EFTA) – which includes Switzerland, Norway, Iceland and Liechtenstein – in March 2024.
Under the agreement, India will cut tariffs on 80–85% of goods coming from these countries to zero, while Indian exporters will get duty-free access to 99% of goods in EFTA markets.
The two sides have also committed to invest $100bn (£74bn) and create a million direct jobs over the next 15 years as part of the deal.
This is India’s first trade agreement where market access is directly tied to these investment pledges.
Experts say it signals a strategic shift in the way trade agreements are being negotiated, with investment commitments and not just tariff reductions becoming part of the deal.
For India, goods like Swiss chocolates and wines are expected to get cheaper, while EFTA countries will benefit from India’s zero tariffs on many medicines, dyes, textiles and iron and steel products over the next five to 10 years.
India’s imports from EFTA countries last year were at $32.4bn – most of which were from Switzerland, which accounted for a third of that number.
Of this, gold imports accounted for approximately $18bn. Under the trade deal, duties on gold remain unchanged.
India’s exports to EFTA countries in the same year were $2bn of which 98% were in industrial goods.
But industrial goods are already at zero duty, so India will not see any incremental benefits, according to Ajay Srivastava from Global Trade Research Initiative (GTRI), a Delhi-based think tank.
“If there are any gains, it may not be because of tariffs but because of perception building, since this is the first trade deal by India with any European country,” Srivastava said. This will send a signal to the world that “India is willing to liberalise”.
The deal comes into effect in the backdrop of steep 50% tariffs imposed by the US on India. Trade talks between the two countries are ongoing.
India is also negotiating several trade deals in a bid to offset the effect of the US tariffs.
Some 6,000 EU companies operate in India and the EU bloc is India’s largest trading partner in goods, with bilateral trade reaching $135bn in 2022-23 and nearly doubling in the last decade.
