 |
Trade and Economic Partnership Agreement (TEPA) negotiations between India and the EFTA countries began in 2008. After 21 extensive rounds of negotiations lasting nearly 16 years, the final agreement was eventually signed by all parties involved.
This agreement is significant as it is the first-ever free trade agreement between India and European countries. However, its enforcement depends on the ratification process, which requires all five countries – India, Liechtenstein, Iceland, Norway, and Switzerland – to ratify the agreement. The agreement will come into force on the “first day of the third month” only after the instruments of ratification are deposited with the government of Norway.
At present, India’s merchandise trade with EFTA countries amounts to USD 18.7 billion, with exports worth USD 1.9 billion and imports at USD 16.7 billion, resulting in a trade deficit of USD 14.8 billion.
When we analyze the trade direction by country, we find that Switzerland is the dominant trade partner, accounting for 91% of bilateral merchandise trade.
India’s current exports to Switzerland are valued at USD 1.3 billion, while imports amount to USD 15.7 billion. India’s exports to Norway reach approximately USD 569 million, with imports at around USD 938 million. India’s exports to Iceland amount to USD 10.4 million and imports at USD 5 million. India’s exports to Liechtenstein are USD 0.3 million and imports stand at USD 2 million, respectively, in the overall trade dynamics.
The top five commodities of India’s exports to Switzerland include organic chemicals, natural or cultured pearls, nuclear reactors, aircraft, spacecraft, and parts thereof, and inorganic chemicals. The top five commodities of India’s imports from Switzerland are natural or cultured pearls, mineral fuels, nuclear reactors, pharmaceutical products, and optical and photography.
The major five commodities of exports to Norway consists of miscellaneous goods, ships, boats and floating structures, organic chemicals, products of the milling industry, and optical photography. India’s import basket from Norway includes mineral fuels, nickel and articles thereof, fertilizers, iron and steel, and aluminum and articles thereof.
The basket of major export commodities to Iceland comprises wadding, felt and nonwovens, iron and steel, organic chemicals, nuclear reactor, and rubber and articles thereof. While the import basket consists of tanning or dyeing extracts, pulp of wood, animal or vegetable fats and oils, optical photography, raw hides and skins.
Electrical machinery and equipment, nuclear reactors, organic chemicals, pharmaceutical products, and other base metals are major commodities of export to Liechtenstein. The top five commodities of India’s imports from Liechtenstein are optical, photographic cinematographic, electrical machinery and equipment, natural or cultured pearls, nuclear reactors, and articles of stone.
The India-EFTA TEPA covers two-way trade in goods, services, and investments. The agreement consists of 14 chapters focusing on market access related to goods, rules of origin, trade facilitation, trade remedies, sanitary and phyto-sanitary measures, technical barriers to trade, investment promotion, market access for services, intellectual property rights, trade and sustainable development, and other legal and horizontal provisions.
EFTA is providing access to 92.2% of its tariff lines, encompassing 99.6% of India’s exports. The agreement is expected to reduce tariffs on products such as machinery, chocolates, and other industrial items and services. The market access offer from EFTA includes all non-agricultural products and tariff concessions on Processed Agricultural Products (PAP). India has presented 105 sub-sectors to EFTA and has obtained commitments in 128 sub-sectors from Switzerland, 114 from Norway, 107 from Liechtenstein, and 110 from Iceland.
This comprehensive agreement covers not only merchandise trade but also services and investment. On the services front, this agreement will boost services exports in key sectors such as IT services, business services, personal and other services. The services offers from EFTA include better access through digital delivery of services, commercial presence, improved commitments, and certainty for the entry and temporary stay of key personnel.
Exporters will gain access to a significant expanding market, thereby diversifying supply chains. By promoting domestic production in industries like manufacturing, machinery, pharmaceuticals, chemicals, food processing, transport and logistics, banking and financial services, insurance, and infrastructure and connectivity, TEPA will boost “Made in India” and Atmanirbhar Bharat.
The EFTA states have committed to enhancing their FDI in India by $50 billion over a span of 10 years. Additionally, they have pledged an additional $50 billion in the subsequent five years. This substantial investment will contribute to infrastructure development, elevate product and service quality, foster a competitive business environment, and provide financial resources for economic growth.
Notably, this agreement is a significant milestone as it is the first legal commitment to promote investment with specific targets and the generation of employment. Over the next 15 years, TEPA will expedite the creation of a significant number of direct jobs, along with improved facilities for vocational and technical training for India’s youthful, aspiring workforce. TEPA also facilitates access to cutting-edge technologies in precision engineering, health sciences, renewable energy, innovation, and research and development.
In conclusion, the India-EFTA TEPA marks a significant milestone in enhancing trade relations between India and the EFTA nations. With its comprehensive framework covering goods, services, and investments, TEPA sets the stage for deeper economic cooperation and mutual benefits.
By reducing tariffs, promoting investment, and facilitating job creation, TEPA not only fosters economic growth but also underscores India’s commitment to embracing free trade amidst a global landscape of protectionism. As TEPA unfolds, it holds the promise of unlocking new avenues for trade expansion, driving innovation, and fostering prosperity for both India and EFTA countries.
European businesses pin hope on EVFTA
The European Parliament has ratified the EU-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA). The ratification is believed to create a breakthrough in trade investment cooperation between European firms and Vietnamese partners after the deals take effect.
Vietnam to increase rice exports to EU under EVFTA
Rice quotas for Vietnam under the Vietnam-EU Free Trade Agreement are expected to push Vietnam’s rice exports up from the second half of this year, according to the Ministry of Industry and Trade.
Foreign officials highlight signing of RCEP
Minister for Economic Affairs and Energy of Germany Peter Altmaier has welcomed the signing of the Regional Comprehensive Economic Partnership (RCEP) agreement between 15 signatories in Asia-Pacific.
VNA selects top 10 economic events of Vietnam in 2020
Vietnam among very few countries to post GDP growth rate of 2.5-3 percent, and the signing of the Regional Comprehensive Economic Partnership (RCEP) agreement in 2020 when Vietnam assumes ASEAN Chairmanship are among the top 10 domestic economic events in the year. The following are the ten outstanding events as selected by the Vietnam News Agency.
Vietnam maintains positive outlook for economic recovery in 2021: WB
The rapid suppression of the new COVID-19 outbreak in late January 2021 has helped maintain Vietnam’s positive outlook for economic recovery this year, the World Bank (WB) has said.
