Why in news?
India’s free trade agreement with the European Free Trade Association (EFTA) — comprising Iceland, Liechtenstein, Norway and Switzerland — entered into force on 1 October 2025. Called the Trade and Economic Partnership Agreement (TEPA), it is India’s first FTA with developed European countries and includes a binding commitment to investment and employment.
Key features of TEPA
- Investment and jobs: EFTA states pledge to facilitate USD 50 billion of foreign direct investment (FDI) into India within ten years of entry into force and another USD 50 billion in the following five years. The investments aim to create at least one million direct jobs in India.
- Market access: EFTA offers zero‑duty access on 92.2 % of tariff lines covering 99.6 % of India’s exports, including non‑agricultural goods and many processed food items. India reciprocates on 82.7 % of tariff lines while protecting sensitive sectors such as dairy, medical devices and coal.
- Services and mobility: India and EFTA commit to liberalising a wide range of services. Mutual Recognition Agreements in professional services like nursing, chartered accountancy and architecture will ease movement of skilled workers. Provisions on digital delivery and temporary entry of personnel boost India’s IT and business‑service exports.
- Intellectual property and sustainability: The agreement upholds intellectual property rights at the level of the World Trade Organization’s TRIPS agreement while safeguarding access to generic medicines. It contains a chapter on trade and sustainable development, emphasising environmental protection, labour rights and inclusive growth.
- Sectoral opportunities: Indian exporters stand to gain in machinery, electronics, chemicals, textiles, gems and jewellery, processed foods, marine products, coffee and tea. Agricultural exports like basmati rice, guar gum, mangoes and pulses benefit from tariff elimination in Switzerland and Norway.
Significance
TEPA positions India within high‑income European markets, attracting long‑term capital for manufacturing, technology and innovation. By linking investment commitments to employment generation it helps align trade policy with domestic priorities such as Make in India and the production‑linked incentive scheme. For EFTA countries the agreement offers access to a large and growing market and diversifies supply chains beyond traditional partners. In the long run TEPA could serve as a template for other FTAs that blend market access with developmental goals.