On Sunday, India signed the India-EFTA Trade and Economic Partnership Agreement, our first trade deal with any Western nation or group. It was signed with the European Free Trade Association (EFTA), which comprises Iceland, Liechtenstein, Norway and Switzerland. It’s an innovative and well-balanced pact that covers two-way trade in goods and services as well as bilateral investments. Moreover, it is expected to pave the way for negotiations with other Western countries and blocs, including the EU, UK and US, among others.
The four EFTA members are not part of the EU and this inter-governmental organization was set up to promote and intensify trade. India has been negotiating a trade deal with this group since January 2008, but talks gained momentum only over the past year.
There is a broader global context to it. As little progress has been witnessed at the World Trade Organization (WTO), a multilateral forum, many countries around the world are rushing to forge free trade agreements (FTAs) to suit their requirements. The Narendra Modi government of India, on its part, has been working on ties with the EU, UK and US, apart from Canada, Qatar, the UAE, Australia, Mauritius and others. Given the current uncertainty over striking deals with the EU and UK, despite all the optimism, Sunday’s deal assumes special significance. Indian negotiators deserve praise for their relentless efforts to revive talks that had stalled for years in the face of various complexities and divergent geopolitical interests.
And for India to play an active role in global supply chains in a fast-changing world, international alliances are crucial.
India-EFTA trade dynamics: India has consistently had a trade deficit with EFTA countries; it peaked at $23.7 billion in 2021-22, and then declined to $14.8 billion in 2022-23 before it again widened to $15.6 billion in April-December 2023. Switzerland is India’s largest trade partner among the group’s four members. India’s imports from Switzerland during January-December 2023 stood at almost $14 billion, vis-à-vis Indian exports of $877 million, resulting in a deficit of over $13.1 bil- lion. Gold, with imports of about $13 billion, is the single largest imported item from that country. However, a large proportion of this gold goes into jewellery product that finds their way into interna- tional markets from India. Major Indian exports to EFTA countries include chemicals and semi-pre- cious stones, ships and boats, pharmaceuticals and electronic instruments.