India-EFTA Trade and Economic Partnership Agreement (TEPA)

GENERAL STUDIES-3
(TECHNOLOGY, ECONOMIC DEVELOPMENT, BIO-DIVERSITY, ENVIRONMENT, SECURITY AND DISASTER MANAGEMENT)

Why in news

• India signed a Trade and Economic Partnership Agreement (TEPA) with the European Free Trade Association (EFTA) on March 10, 2024.

Background:

• EFTA comprises Iceland, Liechtenstein, Norway, and Switzerland.
• This marks the first FTA with a major European economic bloc.

Significance of TEPA:

• Boost to Make in India: Encourages domestic manufacturing in key sectors like infrastructure, pharmaceuticals, and food processing.
• Increased Market Access: EFTA offers duty-free access for 99.6% of India’s exports. India offers similar access for 95.3% of EFTA’s exports (excluding sensitive items like agriculture).
• Investment Promotion: EFTA commits to promoting $100 billion in investments and creating 1 million jobs in India over 15 years.
• Services Sector Growth: TEPA facilitates better access for Indian IT, business, and education services in EFTA markets.
• Technology Collaboration: Enables access to advanced technologies in areas like engineering, healthcare, and renewable energy.
• Integration with European Markets: Provides a steppingstone for Indian companies to access the EU market through Switzerland, a major service exporter to the EU.

Agreement Highlights:

• Market Access: Covers goods, services, and investments.
• Investment Promotion: Focuses on job creation and technology transfer.
• Tariff Reduction: Significant reduction in tariffs for both sides.
• Services Liberalization: Improved access for Indian service providers in EFTA markets.
• Intellectual Property: Upholds WTO’s TRIPS agreement while addressing India’s concerns on generic medicines and patent evergreening.
• Sustainable Development: Promotes environmentally friendly practices.

Expected Benefits:

• Increased trade and investment flows.
• Job creation in India.
• Technological advancement.
• Enhanced competitiveness of Indian goods and services.
• Stronger economic ties with Europe.

Challenges:

• Managing import surges of sensitive items.
• Ensuring balanced benefits for all sectors.

Overall, TEPA is a landmark agreement with the potential to significantly boost India’s trade and economic growth.