In a historic step for India’s trade policy, the India–European Free Trade Association (EFTA) Trade and Economic Partnership Agreement (TEPA), signed on March 10, 2024, came into effect on October 1. This marks India’s first free trade agreement (FTA) with the four developed European nations of Iceland, Liechtenstein, Norway, and Switzerland, heralding a new era of economic collaboration.
The agreement, described as one of India’s most ambitious trade pacts, commits EFTA nations to channel $100 billion in foreign direct investment (FDI) into India over the next 15 years, alongside creating one million direct jobs. This binding pledge, a first in any Indian FTA, underscores the deal’s focus on long-term, capacity-building investments in manufacturing, innovation, and research.
The TEPA, comprising 14 chapters, covers critical areas such as market access for goods, trade facilitation, investment promotion, services, intellectual property rights (IPR), and sustainable development. It aligns India’s Atmanirbhar Bharat vision with EFTA’s pursuit of diversified, resilient partnerships, fostering deeper economic ties between India and these European nations.
For India, the agreement opens access to high-income markets, with EFTA offering tariff concessions on 92.2% of tariff lines, covering 99.6% of India’s exports, including non-agricultural goods and processed agricultural products. In return, India has extended concessions on 82.7% of tariff lines, covering 95.3% of EFTA exports, while safeguarding sensitive sectors like dairy, soya, coal, pharmaceuticals, and agriculture. Notably, gold, which constitutes over 80% of EFTA imports to India, sees no change in effective duty.
The TEPA sets a bold target: $50 billion in FDI within the first 10 years, followed by another $50 billion in the subsequent five years. A dedicated India–EFTA Desk, operational since February 2025, facilitates investments in sectors like renewable energy, life sciences, engineering, and digital transformation, promoting joint ventures and small and medium enterprise (SME) collaborations.
Indian exporters stand to gain significantly, particularly in machinery, organic chemicals, textiles, and processed foods. Agricultural exports, valued at $72.37 million in FY 2024–25, including guar gum, basmati rice, pulses, and fruits, will benefit from reduced or eliminated tariffs in Switzerland and Norway, which account for over 99% of India’s agri-trade with EFTA. For instance, Switzerland has eliminated tariffs of up to 127.5 CHF/100 kg on food preparations and 272 CHF/100 kg on fresh grapes, while Norway offers duty-free access for processed vegetables, fruits, and rice.
Marine products, a key export, will see tariff exemptions of up to 13.16% in Norway and 10% in Iceland, boosting competitiveness for Indian shrimp, prawns, and fish feed. Coffee and tea exports are also set to gain, with zero-duty access to premium markets in Switzerland and Norway, where India’s export realisation for tea rose to $6.77/kg in 2024–25, up from $5.93/kg the previous year.
With services contributing over 55% to India’s Gross Value Added (GVA), TEPA provides a robust platform for exports in IT, business services, education, and professional services. India has committed to 105 sub-sectors, while EFTA nations offer access in 128 (Switzerland), 114 (Norway), 110 (Iceland), and 107 (Liechtenstein) sub-sectors. Mutual Recognition Agreements (MRAs) in fields like nursing, chartered accountancy, and architecture will facilitate professional mobility, enhancing India’s services exports through digital delivery, commercial presence, and temporary stays for skilled professionals.
The agreement strengthens India’s industrial and manufacturing sectors, with engineering goods exports to EFTA rising 18% to $315 million in FY 2024–25. Sectors like electronics, textiles, apparel, gems, and jewellery will benefit from duty stability and simplified standards. In electronics, TEPA offers Indian MSMEs and OEMs a springboard to scale globally, particularly in medical electronics, EV components, and smart sensors, leveraging EFTA’s high-income markets and India’s IPR protections.
Chemical exports, projected to grow from $49 million to $65–70 million, will benefit from zero or reduced tariffs on 95% of tariff lines, boosting pet food, rubber, ceramics, and plastics. The agreement also supports India’s sustainability goals, fostering cooperation in renewable energy and climate-tech.
The TEPA balances ambition with prudence, protecting domestic industries under flagship programs like Make in India and the Production Linked Incentive (PLI) Scheme through phased tariff reductions over 5–10 years. Its IPR provisions align with TRIPS, safeguarding India’s public health policies while fostering innovation. For Switzerland, a global innovation hub, the agreement reflects confidence in India’s regulatory framework.