Eyes On Growth: India Aims $100 Bn Investment, 1 Mn Jobs Via EFTA Deal
On 10 March 2024, India has signed a landmark Trade and Economic Partnership Agreement (TEPA) with the European Free Trade Association (EFTA), a four-nation bloc comprising Iceland, Liechtenstein, Norway and Switzerland. The agreement, hailed by Indian officials as a historic moment, is expected to boost economic ties between the signatory nations.
The signing ceremony, held in New Delhi, was attended by Indian Commerce and Industry Minister Piyush Goyal and trade ministers from some EFTA countries. In addition, the agreement includes a commitment from EFTA to promote investments in India to reach USD 100 billion over the next 15 years. This investment is expected to generate an estimated one million direct jobs in India.
Additionally, Prime Minister Narendra Modi took to X and wrote, "We are delighted with the signing of the India-EFTA Trade and Economic Partnership Agreement. This historic agreement demonstrates our commitment to accelerating economic growth and creating opportunity for our children."
The Prime Minister further stated, "The times ahead will bring more prosperity and mutual growth as we strengthen our bonds with EFTA nations."
While acknowledging the minimal gains expected from tariff reductions due to existing low tariffs within the EFTA bloc, Indian officials pointed to the investment pledges as a key driver of the agreement. According to some media reports, negotiations are focused on securing these investment commitments in light of the limited scope for increased market access for Indian goods.
Further, speaking at the ceremony, Minister Goyal highlighted the unique nature of the agreement, stating, "Never before in the history of FTAs has such an FTA ever happened." He emphasised the balanced and fair nature of the pact, which he believes will provide Indian industries with access to cutting-edge technologies and innovation.
However, analysts from the Global Trade Research Initiative (GTRI) expressed reservations about the feasibility of achieving the promised investment figures. They pointed out that investment decisions are primarily driven by private companies based on their commercial considerations.
In addition, Helene Budliger Artieda, Swiss State Secretary, Economic Affairs, expressed her belief that the TEPA will position India as a world leader in manufacturing and services. She also predicted that high-quality Indian goods would gain greater access to the Swiss market while creating job opportunities for Indian youth.
Additionally, the signing of the TEPA marks the culmination of efforts that began in January 2008. Negotiations stalled in 2013 but were revived in October 2016. The pact covers a broad range of areas, including market access for goods and services, trade facilitation, intellectual property rights and sustainable development.
Federal Councillor Parmelin, representing the EFTA member highlighted the benefits for EFTA countries, which will gain access to a major growth market and diversify their supply chains. He also acknowledged the potential for increased foreign direct investment from EFTA into India, leading to job creation.
Further, the agreement has been lauded for incorporating a human rights clause, a first for India in its free trade agreements. Jan Christian Vestre, Trade Minister, Norway stated on Sunday that tariff cuts, a critical human rights component and an investment chapter required substantial time and effort during the India-EFTA trade discussions.
She told news agency ANI, "This is the first time India has included a chapter on human rights in a free trade agreement and it is the first trade agreement globally where an investment chapter has been included."
The India-EFTA TEPA is a significant development with the potential to reshape economic ties between the signatory nations. While the true impact of the agreement remains to be seen, the focus on investment and job creation has garnered attention.
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