EFTA pact kicks into action amid US tariffs
The trade agreement with the four-nation European bloc was signed in March
Indian exporters now have the opportunity to diversify their business from high tariff markets like the US to a bloc of four European countries (especially for items like plastic goods) from Wednesday as the free trade deal between India and European Free Trade Association (EFTA) will be operationalized on October 1, according to an official statement.
India and EFTA nations—Norway, Switzerland, Iceland and Liechtenstein—on March 10 signed the Trade and Economic Partnership Agreement (TEPA) with a binding commitment from the bloc for infusion of direct investments of $100 billion into India over 15 years to create 1 million jobs. After completion of legal processes in respective countries, TEPA will be formally operationalized from Wednesday, officials said. TEPA came as some relief to Indian exporters who have been badly hit by 50% additional tariffs in the US market.
“TEPA offers Indian plastic exporters significant opportunities to diversify away from high-tariff markets such as the US and strengthen their presence in high-value EFTA markets. With zero tariffs and improved trade facilitation, India’s exports across diverse panels are expected to achieve steady growth, supported by vast untapped potential in Switzerland and Norway,” a statement from the commerce ministry said on Wednesday.
A formal launch of TEPA may take place on Wednesday in New Delhi with a group of investors from EFTA nations is expected to arrive in India. The European countries may also announce the first tranche of $100 billion investments as committed under TEPA.
Under TEPA, the EFTA block removed duties on 92.2% of tariff lines encompassing 99.6% of India’s exports, including 100% of non-agricultural products and concessional tariffs on processed agricultural products (PAP). In turn, India offered 82.7% of tariff lines, accounting for 95.3% of EFTA exports.
“Sensitive sectors [are] protected, including pharma, medical devices, processed food, dairy, soya, coal and sensitive agricultural products,” the ministry added in the statement. Adequate support has been given to strategically important products, particularly those under the government’s ‘Make in India’ programme and production-linked incentive (PLI) scheme, it said. Concessions have been provided in such sectors over periods of five, seven, or even 10 years with gradual tariff reduction, it added.
The deal is expected to help India’s agricultural and processed food exports. Certain categories are high-opportunity sectors for India like rice, where tariff elimination will enhance competitiveness against Italy, Thailand and Pakistan, according to the statement.
TEPA is also expected to boost India’s services exports in core strength areas like IT and business services, cultural and recreational services, education, and audio-visual services.
