Cabinet likely approves FTA with EFTA; pact may be inked on Sunday

The agreement along with greater market access also has commitment for investment of $ 100 billion in India over the next 15 years to generate one million jobs.

The EFTA that includes Switzerland, Norway, Iceland and Liechtenstein will be encouraging $ 50 billion of investments by their companies in India in the first 10 years of the FTA coming into force. The remaining $50 billion will come in the next five years, sources said.

In the agreement each member will get different level of duty reductions from India, unlike other agreements India has signed with economic groups like Asean.

The investment offer brings some gains on the table from the FTA, which is formally called EFTA-India Trade and Economic Partnership Agreement, for India. Already the tariffs in the four countries of the grouping are very low. India’s largest trading partner in EFTA, Switzerland has brought down import tariffs on all industrial goods to zero from January 1 this year so it has nothing more to offer in the trade deal in manufactured goods.

One of the key demands of Switzerland In the FTA is cuts in import duty on gold. India’s imports from Switzerland in 2022-23 stood at $ 15.79 billion of which gold alone amounted to $ 12.6 billion. India’s exports to Switzerland during the period were $1.34 billion resulting in a deficit of $ 14.45 billion.

On gold Switzerland has been offered the same deal that the United Arab Emirates (UAE) got in its FTA with India. There will be a concession of 1% on duty imposed on gold from Switzerland and it will be for a specified quantity. At present, a 12.5 per cent basic customs duty and a 2.5 per cent cess are imposed on gold imports. The quantity of gold imports at lower duty from UAE are fixed for each year and the final cap is 200 metric tonnes.

With other countries of the bloc India’s trade engagement is limited. Two-day trade with Norway was $1.5 billion, Iceland $15 million and Lichtenstein $ 2.3 million in 2022-23.

First round of negotiations on trade pact were held in October 2008 and since then many rounds of talks have taken place. Like other FTAs the issues being discussed include EFTA demand for commitments on intellectual property protection and from the Indian greater access to the services market in these countries.