India-EFTA trade pact with sustainability clause to take effect on October 1

India’s free trade agreement with the European Free Trade Association (EFTA) will come into force on October 1, Switzerland said on Wednesday. The pact includes, for the first time, legally binding provisions on trade and sustainable development.

The EFTA bloc consists of Iceland, Liechtenstein, Norway, and Switzerland. Both sides signed the Trade and Economic Partnership Agreement (TEPA) on March 10, 2024.

As part of the deal, India secured an investment commitment of USD 100 billion over 15 years. Of this, USD 50 billion will be invested within the first decade, followed by another USD 50 billion in the next five years. The investment is expected to generate one million direct jobs in India. This is the first such pledge in any of India’s trade agreements.

In return, India agreed to reduce or eliminate duties on several EFTA exports such as Swiss watches, chocolates, and cut and polished diamonds. Switzerland said, “It also improves access to the Indian market for Swiss goods and services. India grants Switzerland improved market access for 94.7 per cent of existing exports (2018-2023, excluding gold).” These exports include pharmaceutical products, machinery, optical instruments, watches, and processed agricultural goods.

The agreement also increases legal certainty and predictability in bilateral trade. It further confirms the rights and obligations of both sides under existing international treaties on trade, environment, social affairs, and human rights. “This is to ensure that neither the environmental and labour legislation of the partner countries nor international environmental and social laws are violated in connection with the agreement,” Switzerland said.

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