India has recently finalized a significant Trade and Economic Partnership Agreement (TEPA) with the European Free Trade Association (EFTA) countries, namely Switzerland, Iceland, Norway, and Liechtenstein.
The Union Cabinet, under the leadership of the Honorable Prime Minister, has approved the signing of TEPA with EFTA States. EFTA, established in 1960, is an inter-governmental organization dedicated to promoting free trade and economic integration among its four Member States.
In a statement, Shri Piyush Goyal, Minister of Commerce and Industry, Food and Consumer Affairs, and Textiles, highlighted TEPA's modern and ambitious nature. This marks India's first Free Trade Agreement (FTA) with four developed nations, a significant economic bloc in Europe. Notably, TEPA commits to $100 billion in investments and the creation of 1 million direct jobs in India over the next 15 years—a milestone in the history of FTAs.
The highlights of the agreement are:
- EFTA has committed to promoting investments to increase the stock of foreign direct investments by USD 100 billion in India in the next 15 years, and to facilitate the generation of 1 million direct employment in India, through such investments. The investments do not cover foreign portfolio investment.
- For the first ever time in the history of FTAs, a legal commitment is being made to promoting target-oriented investment and the creation of jobs.
- EFTA is offering 92.2% of its tariff lines which covers 99.6% of India’s exports. The EFTA’s market access offer covers 100% of non-agri products and tariff concession on Processed Agricultural Products (PAP).
- India is offering 82.7% of its tariff lines which covers 95.3% of EFTA exports of which more than 80% of imports is Gold. The effective duty of Gold remains untouched. Sensitivity related to PLI in sectors such as pharma, medical devices & processed food, etc. has been taken while extending offers. Sectors such as dairy, soya, coal, and sensitive agricultural products are kept in the exclusion list.
- India has offered 105 sub-sectors to the EFTA and secured commitments in 128 sub-sectors from Switzerland, 114 from Norway, 107 from Liechtenstein, and 110 from Iceland.
- TEPA would stimulate our services exports in sectors of our key strength/interest such as IT services, business services, personal, cultural, sporting, and recreational services, other education services, audio-visual services, etc.
- Services offered by EFTA include better access through digital delivery of Services (Mode 1), commercial presence (Mode 3), and improved commitments and certainty for entry and temporary stay of key personnel (Mode 4).
- TEPA has provisions for Mutual Recognition Agreements in Professional Services like nursing, chartered accountants, architects, etc.
- Commitments related to Intellectual Property Rights in TEPA are at the TRIPS level. The IPR chapter with Switzerland, which has high standards for IPR, shows our robust IPR regime. India’s interests in generic medicines and concerns related to the evergreening of patents have been fully addressed.
- India signals its commitment to Sustainable development, inclusive growth, social development, and environmental protection
- Fosters transparency, efficiency, simplification, harmonization and consistency of trade procedures
- TEPA will empower our exporter's access to specialized inputs and create a conducive trade and investment environment. This would boost exports of Indian-made goods as well as provide opportunities for the services sector to access more markets.
- TEPA provides an opportunity to integrate into EU markets. Over 40% of Switzerland’s global services exports are to the EU. Indian companies can look to Switzerland as a base for extending their market reach to the EU.
- TEPA will give impetus to “Make in India” and Atmanirbhar Bharat by encouraging domestic manufacturing in sectors such as Infrastructure and Connectivity, Manufacturing, Machinery, Pharmaceuticals, Chemicals, Food Processing, Transport and Logistics, Banking and Financial Services, and Insurance.
- TEPA would accelerate the creation of a large number of direct jobs for India’s young aspirational workforce in the next 15 years in India, including better facilities for vocational and technical training. TEPA also facilitates technology collaboration and access to world-leading technologies in precision engineering, health sciences, renewable energy, Innovation, and R&D.
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