India signed a pact with four European countries on Sunday, courting $100 billion worth of investment in exchange for lifting most import tariffs on industrial products from the nations.
The deal between India and the European Free Trade Association — comprised of Switzerland, Norway, Iceland and Liechtenstein — concludes nearly 16 years of negotiations.
The four countries will commit to investing the $100 billion over 15 years in India’s fast-growing market of 1.4 billion people, Indian Trade Minister Piyush Goyal said.
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The pact covers some new elements such as intellectual rights and gender equity, Goyal added, telling a press conference, “It is a modern trade agreement, fair, equitable and win-win for all five countries.”
India has struck similar trade pacts with Australia and the United Arab Emirates over the last two years. Indian officials say a another deal, with Britain, is in its final stages.
The push is part of Prime Minister Narendra Modi’s aim to notch up annual exports to $1 trillion by 2030. The EFTA pact comes ahead of the Indian general election due by May at which Modi will seek a record third term.
Sustainable trade in focus
India is the EFTA grouping’s fifth-largest trading partner after the European Union, the United States, Britain and China, with total two-way trade of $25 billion in 2023, its trade ministry estimates.
“The agreement contains a comprehensive and legally binding chapter on trade and sustainable development,” the Swiss government said.
“This will enable the EFTA states, in particular, to address trade-related sustainability considerations.”
Analysts said the pact may not immediately help India to cut a large trade gap with the group, but will help draw investment into key industries.
“The trade agreement will help attract investment in critical sectors like medical devices, clean energy and expand exports to other countries by accessing Swiss and Norway technologies,” said trade economist Ram Singh, who heads a New Delhi thinktank, the Indian Institute of Foreign Trade.
Slashing import taxes
The Indian market offers immense opportunities for trade and investment, Swiss economic official Guy Parmelin said.
On its part, India will lift, or partially remove, very high customs duties on 95.3% of industrial imports from Switzerland, excluding gold, either immediately or over time, the Swiss government said in a statement.
“Norwegian companies exporting to India today meet high import taxes of up to 40% on certain goods,” Industry Minister Jan Christian Vestre said in a separate statement.
“With the new deal, we have secured nil import taxes on nearly every Norwegian good.”
The five signatories must ratify Sunday’s deal before it can take effect, with Switzerland planning to do so by 2025.
- Reuters, with additional editing by Vishakha Saxena
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