India Efta Free Trade Agreement


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India and EFTA Eye Closer Economic Ties through Free Trade Agreement

India and the European Free Trade Association (EFTA) have been negotiating a free trade agreement (FTA) for nearly a decade, and the latest round of talks reportedly made progress in resolving some key issues. If successfully concluded, the India-EFTA FTA could enhance bilateral trade and investment flows, promote economic growth and job creation, and strengthen geopolitical ties between India and Europe.

What is EFTA and why does it matter?

EFTA is a regional trade organization composed of four European countries: Switzerland, Norway, Iceland, and Liechtenstein. It was founded in 1960 as an alternative to the then-European Economic Community (EEC), which later evolved into the European Union (EU). EFTA aims to promote free trade among its members and with other countries through bilateral and multilateral agreements and frameworks. EFTA has FTAs with many countries and regions, such as Canada, South Korea, Mexico, Singapore, and Chile, and is currently negotiating or exploring FTAs with several other partners, including the United Kingdom, India, MERCOSUR, and Indonesia.

India, on the other hand, is the world`s sixth-largest economy by nominal GDP and the third-largest by purchasing power parity (PPP). It has a vast market of over 1.3 billion people, a young and skilled workforce, rich cultural heritage, and a strategic location in South Asia. India has been actively pursuing an “Act East” policy to deepen its economic and diplomatic engagement with the Asia-Pacific region, and a “Neighborhood First” policy to enhance its relations with its neighboring countries, including China, Pakistan, Bangladesh, and Sri Lanka. India is also a member of several regional and global trade organizations, such as the South Asian Association for Regional Cooperation (SAARC), the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), the World Trade Organization (WTO), and the Regional Comprehensive Economic Partnership (RCEP).

What are the potential benefits of the India-EFTA FTA?

The India-EFTA FTA has been under discussion since 2008, and the two sides have held 15 rounds of talks so far. The negotiations have faced some hurdles, including disagreements over intellectual property rights, labor and environment standards, and market access for goods and services. However, the recent round of talks held virtually in September 2020, reportedly made headway in addressing some of these issues, and the two sides are expected to resume talks in early 2021.

If and when concluded, the India-EFTA FTA could offer several benefits for both sides. For India, the FTA could:

– Expand its export markets for goods and services, especially in sectors such as pharmaceuticals, textiles, gems and jewelry, engineering, and information technology (IT).

– Attract more foreign direct investment (FDI) from EFTA countries, which are known for their high-tech industries, financial services, logistics, and tourism.

– Enhance its competitiveness and productivity by accessing EFTA`s advanced technologies, management practices, and standards, while also learning from its best practices in sustainability, innovation, and social welfare.

– Strengthen its geopolitical and strategic ties with Europe, which is a major global player in politics, security, and culture, and can support India`s aspirations for a multipolar and rules-based world order.

For EFTA, the FTA could:

– Create new business opportunities and investment prospects in India, which has a fast-growing consumer market, a large pool of skilled workers, and a diverse range of natural and cultural resources.

– Eliminate or reduce tariffs and non-tariff barriers to trade and investment, which can lower costs, boost efficiency, and increase profitability for EFTA companies operating in India.

– Enhance its access to Indian goods and services, which can complement or substitute for its domestic production and consumption patterns, and help diversify its sources of supply and demand.

– Strengthen its cooperation with India on issues of mutual interest, such as climate change, digitalization, education, and research, and contribute to a more balanced and inclusive global governance.

What are the challenges and risks of the India-EFTA FTA?

While the India-EFTA FTA has potential benefits, it also faces several challenges and risks that need to be addressed and managed. Some of these are:

– Domestic opposition: The FTA negotiations have faced criticism from some Indian industries, trade unions, and civil society groups, who fear that the agreement could lead to job losses, unfair competition, and weaker environmental and labor standards. They demand more transparency, consultation, and safeguards in the negotiations and the implementation of the FTA. Similarly, some EFTA countries have voiced concerns over the impact of the FTA on their agriculture sector, which is heavily protected and subsidized.

– Geopolitical tensions: The FTA negotiations may also be affected by the broader geopolitical context, such as the ongoing disputes between India and its neighbors, especially China and Pakistan, as well as the EU`s relations with the US and other major powers. The FTA may also need to align with other trade and investment agreements that EFTA or India are negotiating with other partners, such as the UK, Japan, or the RCEP.

– Technical complexities: The FTA negotiations involve complex issues that require technical expertise, such as rules of origin, customs procedures, sanitary and phytosanitary measures, and investment protection. These issues may require substantial resources and time to negotiate and implement, and may also pose challenges for small and medium enterprises (SMEs) that lack the capacity and experience to comply with the FTA provisions.

– Global uncertainties: The FTA negotiations may also be affected by global uncertainties, such as the COVID-19 pandemic, the economic recession, the rising protectionism, and the technological disruptions. These factors may change the demand and supply patterns, the investment flows, and the regulatory frameworks that the FTA seeks to address. They may also require the FTA to be flexible and adaptive to changing circumstances and emerging opportunities.


The India-EFTA FTA represents a promising opportunity for both India and EFTA to deepen their economic ties and strengthen their geopolitical relations. While there are challenges and risks that need to be addressed, the potential benefits of the FTA are significant and diverse. The negotiations need to be carried out in a transparent, consultative, and inclusive manner, taking into account the concerns and interests of all stakeholders, and balancing the economic, social, and environmental dimensions. The successful conclusion and implementation of the India-EFTA FTA would signal a positive message of open, fair, and rules-based trade and investment, and contribute to a more resilient and sustainable global economy.