The recent signing of the trade agreement between India and the European Free Trade Association (EFTA) heralds a new era in global trade dynamics. This pact, representing a significant milestone for both parties, holds the promise of bolstering economic cooperation and fostering mutual growth. As India emerges as a pivotal player in the global economy, the agreement underscores its commitment to liberalizing trade and embracing multilateralism. Likewise, for the EFTA nations, comprising Iceland, Liechtenstein, Norway, and Switzerland, this deal opens up avenues for enhanced market access and diversification of trade partners. With tariffs being slashed and barriers to trade reduced, the agreement is poised to unleash a wave of opportunities.
Tag: GS – 2 Bilateral Groupings & Agreements, Groupings & Agreements Involving India and/or Affecting India’s Interests
In News: A recent article revolves around the importance and hurdles associated with the newly inked Trade and Economic Partnership Agreement (TEPA) between India and the European Free Trade Association (EFTA).
European Free Trade Association (EFTA)
- An intergovernmental organization promoting free trade and economic integration.
- Member States: Iceland, Liechtenstein, Norway, and Switzerland.
History
- Established by a Convention signed in Stockholm on January 4, 1960.
- Aims to serve as an alternative trade bloc for European states not joining the European Economic Community (EEC).
Main Tasks
- Maintaining and developing the EFTA Convention.
- Managing the Agreement on the European Economic Area (EEA Agreement).
- Developing EFTA’s worldwide network of free trade agreements.
India and EFTA
- Bilateral trade between India and EFTA countries reached USD 18.65 billion in 2022-23.
- Switzerland is India’s largest trading partner in the group, followed by Norway.
- India-EFTA Trade and Economic Partnership Agreement (TEPA) signed in March 2024.
Trade and Economic Partnership Agreement (TEPA)
- Aims to create trade and investment opportunities by eliminating tariffs and non-tariff barriers.
- Covers 14 chapters, including trade in goods, intellectual property rights, and trade facilitation.
Key Highlights
- EFTA commits to investing USD 100 billion in India over 15 years, generating 1 million direct jobs.
- Offers 92.2% of tariff lines covering 99.6% of India’s exports.
- India offers 82.7% of tariff lines covering 95.3% of EFTA exports.
- Provisions for Mutual Recognition Agreements in professional services.
Significance of India-EFTA Deal
- Economic growth and job creation.
- Investment boost for infrastructure and technology sectors.
- Expansion of trade in services.
- Access to high-quality Swiss products for Indian customers.
- Strengthening India’s economic ties with Europe.
Key Issues
- Exclusion of sensitive sectors like agriculture.
- Concerns over data exclusivity provisions.
- Difference in income levels between India and EFTA countries.
- Non-tariff barriers and domestic resistance.
Way Forward
- Address asymmetries through common ground.
- Streamline regulatory processes and reduce non-tariff barriers.
- Build capacity and infrastructure for growth.
- Foster collaboration through stakeholder dialogues and knowledge sharing.
Conclusion
- The India-EFTA deal offers a promising opportunity for a stronger economic partnership.
- Collaborative efforts and shared vision are essential for its success and for setting a positive precedent for future trade agreements.
| UPSC Previous Year Questions Prelims (2018) Q. 1. Consider the following countriesAustraliaCanadaChinaIndiaJapanUSAWhich of the above are among the ‘free-trade partners’ of ASEAN? (a) 1, 2, 4 and 5 (b) 3, 4, 5 and 6 (c) 1, 3, 4 and 5 (d) 2, 3, 4 and 6 Ans: C Prelims (2017) Q2‘Broad-based Trade and Investment Agreement (BTIA)’ is sometimes seen in the news in the context of negotiations held between India and (a) European Union (b) Gulf Cooperation Council (c) Organization for Economic Cooperation and Development (d) Shanghai Cooperation Organization Ans: A Mains (2020)Q1. Quadrilateral Security Dialogue (Quad) is transforming itself into a trade bloc from a military alliance, in present times. Discuss. |
Source: TH
Frequently Asked Questions (FAQs)
1. What is the India-EFTA trade deal?
- The India-EFTA trade deal refers to the trade agreement between India and the European Free Trade Association (EFTA) member countries. EFTA is composed of Iceland, Liechtenstein, Norway, and Switzerland. This agreement aims to enhance economic cooperation and trade relations between India and the EFTA nations.
2. What are the main objectives of the India-EFTA trade deal?
- The primary objectives of the India-EFTA trade deal include reducing tariffs on goods, facilitating trade in services, promoting investments, and fostering economic growth for both India and the EFTA countries. It also aims to address non-tariff barriers and enhance regulatory cooperation to smoothen trade flows.
3. How will the India-EFTA trade deal benefit India?
- The India-EFTA trade deal is expected to benefit India by providing increased market access for its goods and services in EFTA countries. It can lead to a boost in exports, job creation, and economic growth. Moreover, the agreement can facilitate technology transfer and collaboration, contributing to industrial development in India.
4. What sectors are likely to be impacted by the India-EFTA trade deal?
- Various sectors are expected to be impacted by the India-EFTA trade deal, including manufacturing, agriculture, pharmaceuticals, information technology, and services such as banking and finance. Reduction in tariffs and streamlined regulations can open up new opportunities and foster competition in these sectors.
5. How does the India-EFTA trade deal fit into India’s broader trade strategy?
- The India-EFTA trade deal aligns with India’s broader trade strategy of enhancing economic engagement with key global partners. By diversifying its trade relationships and reducing dependency on traditional markets, India aims to strengthen its position in the global economy and harness new opportunities for sustainable growth.
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