Why in news?
10 March 2026 marked two years since India signed the Trade and Economic Partnership Agreement (TEPA) with the European Free Trade Association (EFTA). The milestone prompted discussions on the agreement’s potential to attract investment, create jobs and deepen trade relations.
Background – what is the EFTA?
The European Free Trade Association is an intergovernmental organisation founded in 1960 by seven European countries that wished to promote free trade without joining the European Economic Community. Today its members are Iceland, Liechtenstein, Norway and Switzerland. Unlike the European Union, EFTA is not a customs union; members retain their own tariffs against non‑members but cooperate through free‑trade agreements.
How is EFTA governed?
- EFTA Council: Representatives of the four member states meet regularly in Geneva to manage the association’s activities and negotiate trade agreements.
- Surveillance Authority and Court: Because Norway, Iceland and Liechtenstein participate in the European Economic Area (EEA), they implement many EU regulations. The EFTA Surveillance Authority monitors compliance, and the EFTA Court adjudicates disputes.
India–EFTA TEPA
After 16 years of negotiations, India and EFTA signed the TEPA on 10 March 2024. It is India’s first free trade agreement with binding commitments on investment and job creation.
- Investment commitments: EFTA has pledged to facilitate US $100 billion of foreign direct investment into India over 15 years – US $50 billion in the first ten years and another US $50 billion over the next five. The investments will be in manufacturing, infrastructure and green sectors, not portfolio flows.
- Job creation: EFTA members intend to help create one million direct jobs in India through their investments and partnerships with Indian companies.
- Market access: India will gradually eliminate tariffs on 92.2 percent of EFTA tariff lines, covering 99.6 percent of India’s exports to EFTA. Sensitive sectors such as agriculture and fisheries will receive longer timelines or exclusions.
- Comprehensive scope: The agreement includes trade in services, intellectual property rights, government procurement, rules of origin, sustainable development and cooperation on digital trade.
- Implementation timeline: The TEPA entered into force on 1 October 2025. Review mechanisms allow both sides to adjust commitments if necessary.
Why it matters for India
Access to EFTA’s affluent markets and investment flows can support India’s goal of becoming a global manufacturing hub. By committing to stable rules and standards, India hopes to attract high‑technology firms and create quality employment. Meanwhile, EFTA companies gain access to India’s vast consumer base and skilled workforce.
Sources: PIB.
