Team Blitz India
NEW DELHI: In a crucial phase of economic diplomacy, India’s negotiations with the European Free Trade Association (EFTA) – comprising Switzerland, Norway, Iceland, and Liechtenstein – face both challenges and optimism.
The discussions, part of the longstanding Trade and Economic Partnership Agreement (TEPA) initiative, have been underway since 2008, with the latest having taken place in Geneva in November 2023. A significant development complicating these negotiations is Switzerland’s decision to eliminate tariffs on all industrial goods from January 1.
This policy shift directly impacts India, as industrial goods account for a substantial 98 per cent of its $1.3 billion merchandise exports to Switzerland.
The removal of these tariffs increases competition for Indian products in Switzerland, potentially diminishing the prospective benefits of the free trade agreement (FTA).
Further complicating the negotiations is the considerable trade deficit between India and Switzerland. In 2022-23, India’s imports from Switzerland stood at a towering $15.79 billion, with gold accounting for 80 per cent of these imports. In contrast, Indian exports were significantly lower at $1.34 billion.
This disparity underscores the importance of gold in the FTA discussions, as its inclusion is necessary to meet the World Trade Organization’s (WTO) duty cut conditions for substantial trade.
Another hurdle in the negotiations is the agriculture sector. EFTA’s reluctance to reduce tariffs on basic agricultural produce limits India’s export potential in these products, further nullifying the country’s prospective gains in merchandise exports under the proposed agreement.
Despite these challenges, there is a shared sense of optimism on both sides. Swiss State Secretary for Economic Affairs, Helene Budliger Artieda, has expressed hope for concluding the agreement before the 2024 general elections in India. This optimism is underpinned by the recognition of the need for a balanced deal, considering the diverse economic scales and conditions of the participating countries.
