India bargaining hard with EFTA countries for creation of 1 million jobs

India is bargaining hard with the European Free Trade Association (EFTA) for the creation of at least 1 million jobs in sectors such as medical devices and food processing, and for the purpose, it is eyeing an investment of $100 billion.

EFTA comprises four nations — Iceland, Switzerland, Norway, and Liechtenstein.

Discussions are at an advanced stage and both sides are looking to finalise a trade agreement before the general elections in India, a person aware of the development said.

“India is pushing for investment worth $100 billion over a period of 15 years. This could result in the generation of at least 1 million jobs in India. This could be part of the investment chapter in the proposed trade agreement and not a separate investment pact,” the person cited above told Business Standard.  If this materialises, then it will be the first time that a free-trade agreement (FTA) will see such commitment.

“The European (EFTA) nations are also eyeing joint ventures with India firms. They see India as a large consumer base and India’s growth story is also giving a different picture,” the person said.

India and EFTA nations had launched negotiations on a broad-based trade and investment agreement over 16 years ago. As many as 13 rounds of negotiations were held, after which talks were put on hold around 2013-end. Thereafter, talks resumed in 2016 and four more rounds of negotiations took place.

The last round of negotiations took place from January 8-13 in New Delhi. It saw discussions on trade in goods and services, rules of origin, intellectual property rights (IPR), sustainable development, investment promotion and trade facilitation.

“The negotiations are at an advanced stage,” the commerce department had said last month.

Of the four EFTA nations, Switzerland is India’s largest trading partner. During the previous financial year, India’s trade with EFTA countries resulted in a substantial trade deficit. In FY23, India’s trade deficit with EFTA stood at $14.8 billion, as exports and imports were $1.9 billion and $16.7 billion, respectively.

Delhi-based think tank Global Trade Research Initiative (GTRI) warned that the Indian side faces challenges in achieving a balanced outcome in the agreement with EFTA.

“There are concerns due to the large trade deficit in favour of EFTA, Switzerland’s new policy of allowing tariff-free entry for industrial goods from any country, and limited gains for India in services,” according to the report released last month. 

“These factors raise questions about the fair distribution of benefits to India from the FTA with EFTA countries. The FTA, in its current format, will not help India’s exports and will result in higher imports and wider trade deficit,” according to the report released last month.