India has signed a significant trade and economic partnership agreement with the European Free Trade Association (EFTA), comprising Iceland, Liechtenstein, Norway, and Switzerland, aiming to boost trade and investments between the two regions. This agreement is expected to bring several benefits to Indian consumers and the economy.
Key Benefits for Indian Consumers
One of the major benefits of this trade pact is the phased-out custom duties on imported goods, which will enable domestic consumers to access high-quality Swiss products such as watches, chocolates, biscuits, and clocks at lower prices. The agreement includes tariff concessions on a range of products imported from Switzerland, including seafood, mediterranean fruits, coffee, oils, sweets, processed foods, and wine, among others. This will lead to a drop in prices of these products in Indian markets, making them more affordable and accessible to Indian consumers.Impact on Pricing and Market Access
The agreement specifies tariff reductions on various products over time. For example, wines priced between $5 and less than $15 will see a duty reduction from 150 per cent to 100 per cent in the first year, gradually decreasing to 50 per cent over 10 years. Tariffs on cut and polished diamonds will be reduced from 5 per cent to 2.5 per cent in five years. However, there is no effective tariff concession on gold, as the effective duty remains at 15 per cent.
Benefits for Indians
The agreement is expected to benefit Indian consumers, as the government will phase out custom duties on imported goods over time. This move will enable domestic consumers to access high-quality Swiss products such as watches, chocolates, biscuits, and clocks at lower prices.
Tariff Concessions and Market Impact
According to an analysis by the Global Trade Research Initiative (GTRI), India has allowed tariff concessions to a number of products imported from Switzerland under the agreement. This includes seafood, mediterranean fruits, coffee, oils, sweets, processed foods, and wine, among others.Specifics of the Agreement
- Seafood and Fruits: Tuna, salmon, and mediterranean fruits.
- Beverages: Coffee and wine.
- Food Products: Different oils, variety of sweets and processed foods.
- Consumer Goods: Watches, smartphones, bicycle parts, medical equipment, and clocks.
- Industrial Products: Medicines, dyes, textiles, apparel, iron and steel products, and machinery equipment.
Notable Exclusion: Gold
India has not offered any effective tariff concession on gold. While India agreed to a 1 per cent concession on the bound rate of 40 percent, the effective duty remains at 15 per cent, resulting in no real benefit.
Key Imports from Switzerland
India’s main imports from Switzerland include gold, machinery, pharmaceuticals, coal, optical instruments, watches, soybean oil, and chocolates.
Potential for Collaboration and Innovation
Prime Minister Narendra Modi has hailed the signing of the trade agreement as a ‘Watershed moment’, emphasizing a collective dedication to fostering open, fair, and equitable trade. He highlighted the global leadership of the EFTA countries in innovation and R&D across various sectors, which will open up new doors of collaboration and investment in areas such as digital trade, banking and financial services, transport and logistics, industrial machinery, biotechnology, pharma, chemicals, food processing, and clean energy.
Reaching a Milestone after 16 Years
After a hiatus of nearly 16 years, the EFTA members have finally reached this agreement, marking a milestone in their Free Trade Agreement (FTA) history. Negotiations, which began in 2008 but were halted in November 2013, resumed in October 2016. Over 21 rounds of negotiations, the parties worked towards their conclusion, culminating in this significant agreement.
This trade and economic partnership agreement between India and the EFTA countries is expected to significantly enhance bilateral trade and investments, benefiting both regions and fostering closer economic ties.
Overall, the India-EFTA trade pact is expected to significantly benefit Indian consumers by making high-quality Swiss products more affordable and accessible. It will also enhance bilateral trade and investments, fostering closer economic ties between India and the EFTA countries.
