India has announced that it will remove most import tariffs on industrial products from four European countries in exchange for a $100 billion investment over a 15-year period. This decision comes after the signing of an economic pact on Sunday, marking the end of nearly 16 years of negotiations, as stated by the trade minister.
In recent years, India has also entered into trade agreements with Australia and the United Arab Emirates, with negotiations with Britain nearing completion. Prime Minister Narendra Modi has set a goal of achieving annual exports of $1 trillion by 2030.
Under the new deal, the European Free Trade Association – consisting of Switzerland, Norway, Iceland, and Liechtenstein – will invest $100 billion in India’s rapidly growing market of 1.4 billion people over the next 15 years, announced Trade Minister Piyush Goyal.
As part of the agreement, India will eliminate or reduce high customs duties on 95.3% of industrial imports from Switzerland, excluding gold, either immediately or gradually over time, according to the Swiss government.
Norwegian Industry Minister Jan Christian Vestre highlighted the impact of the deal on his country, stating that Norwegian companies will now face lower or no import taxes on their goods exported to India.
The pact includes provisions on intellectual property rights and gender equality, making it a modern and mutually beneficial trade agreement for all five countries involved, emphasized Goyal during a press conference.
Before the deal becomes effective, all five signatories must ratify it, with Switzerland aiming to do so by 2025. The announcement comes ahead of India’s upcoming general elections, where Modi will seek a third consecutive term.
Despite committing to slightly reduce tariffs on gold, India does not expect a significant impact on gold imports from Switzerland, which totaled $16 billion in the last fiscal year, according to an Indian government official.
Swiss official Guy Parmelin praised the immense trade and investment opportunities that the Indian market offers, highlighting the extensive negotiations that led to the agreement.
India is the fifth-largest trading partner of the EFTA grouping, with total bilateral trade amounting to $25 billion in 2023, according to estimates from the Indian trade ministry.
The agreement includes a comprehensive chapter on trade and sustainable development, which will allow the EFTA states to address sustainability considerations related to trade, as per the Swiss government.
Although the pact may not immediately address India’s trade deficit with the EFTA countries, analysts believe that it will attract investments in crucial sectors such as medical devices and clean energy, ultimately boosting exports with the help of Swiss and Norwegian technologies, as suggested by trade economist Ram Singh.
