India and the four European Free Trade Association (EFTA) countries—Iceland, Norway, Liechtenstein, and Switzerland—have finally concluded a free trade agreement after 16 years of negotiations involving 21 rounds of talks.
EFTA is not part of the European Union (EU). It is an organisation that promotes free trade among the EU’s member countries.
This landmark agreement aims to encourage investments and significantly enhance trade in goods and services between the two parties. The agreement will also help India secure $100 billion in funding and create 1 million jobs in the next 15 years.
FTAs are agreements between two parties to reduce trade barriers and promote trade and investments. Goods and services can be sold without any government restrictions or protectionism; each side has access to the other party’s market without paying tariffs on imports from the other country.
Some advocates of free market capitalism favour Free Trade agreements. They argue that FTAs promote access to high-quality, low-price goods, promote growth & innovation and drive competitiveness.
The agreement with EFTA has been named the Trade and Economic Partnership Agreement (TEPA) and covers areas such as trade in goods, rules of origin, intellectual property rights, services, investment promotion, technical trade barriers, and trade facilitation.
The two-way trade between India and EFTA was $18.65 billion in 2022-23, compared to $27.23 billion in 2021-22, with a trade deficit of $14.8 billion. Switzerland is currently India’s largest trading partner in the EFTA bloc, followed by Norway, Iceland and Liechtenstein.
India has signed free trade agreements with multiple countries and is in talks with many others, such as the India-UK agreement. Here is a list of a few agreements India has signed-
The Free Trade Agreements (FTAs) signed by India provide tariff concessions, thereby opening opportunities for exports of products, including those related to small and medium enterprises (SMEs). FTAs allow greater market access to the partner country’s markets and remove any barriers to trade. Some of the benefits of FTAs include greater economic activity and job creation, increased trade and investment, improved regional economic integration, promote people-to-people and business-to-business ties and usher a new era of development and peace as economically interdependence theorists suggest that countries that are more economically connected have a lesser chance of going to war with each other.
Regional Growth in South Asia will add to the economic prosperity of the countries in the region, reduce poverty, diseases and provide better lives and opportunities for its people.
There has recently been a renewed push for free trade agreements. This is India’s fourth such agreement since 2014. The previous agreements were signed with the UAE, Mauritius, and Australia. The TEPA is a testament to India’s commitment to building a more connected, prosperous world. India is in talks with the EU and UK to reach an agreement, open more markets for Indian exporters, and create favourable conditions for the Indian market to receive more investments.
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