India–EFTA Trade and Economic Partnership Agreement (TEPA)

India–EFTA TEPA explained: key provisions, $100 billion investment commitment, employment potential, trade benefits, and its significance for India’s economy.

Table of Contents

Context

The India–EFTA Trade and Economic Partnership Agreement (TEPA) came into force on 1 October 2025 after being signed on 10 March 2024. It connects India with the European Free Trade Association (EFTA) — Switzerland, Norway, Iceland and Liechtenstein — through easier trade, greater investment, services cooperation and technology partnerships.

What is India–EFTA TEPA?

A trade and economic agreement: TEPA reduces barriers to trade in goods and services and also covers investment, intellectual property, trade facilitation and sustainable development.
EFTA: A group of four European countries — Switzerland, Norway, Iceland and Liechtenstein — that cooperate to promote free trade. They are not members of the European Union.
A broader partnership: TEPA goes beyond simply reducing import duties. It also seeks to increase investment, employment, technology cooperation and global value-chain integration.
Investment and jobs: EFTA has committed to promote $100 billion of investment in India over 15 years and facilitate 1 million direct jobs through such investment.

How can TEPA strengthen India’s trade and exports?

Better Market Access: Lower import duties in EFTA countries can make Indian products more competitive and help Indian companies enter these high-income markets.
Export Diversification: Greater access to Switzerland, Norway, Iceland and Liechtenstein can reduce India’s dependence on a few major export markets.
Services Opportunity: India can expand exports of IT, business, professional, education and other services, supported by commitments covering 105 Indian services sub-sectors.
Global Value Chains: Indian firms can become suppliers to EFTA companies, helping them move into higher-value manufacturing and specialised services.
Stronger Supply Chains: Greater India–EFTA economic integration can create more diversified and resilient supply chains, especially in areas such as clean technology and precision manufacturing.

How can India balance openness with protection of domestic industries?

Protect Sensitive Sectors: India has kept sectors such as dairy, soya, coal and certain agricultural products protected from full tariff liberalisation.
Phased Tariff Cuts: Some sensitive products receive tariff reductions gradually over several years, giving Indian producers time to adjust.
Improve Domestic Competitiveness: Protection should be used as transition time, not permanent shelter. Indian firms must use it to improve productivity and technology.
Support Small Producers: MSMEs, farmers and other vulnerable producers need access to finance, technology, skills and better market information.
Protect Through Standards, Not Inefficiency: India should maintain legitimate quality and safety standards while avoiding unnecessary barriers that reduce competition and consumer choice.

What are the major challenges in implementing TEPA?

Unequal Competitive Strength: EFTA countries have highly developed industries in areas such as machinery, pharmaceuticals and precision engineering, while many Indian firms are still upgrading their capabilities.
Low Preference Utilisation: A tariff benefit is useful only when Indian exporters actually know about it and can meet the conditions required to use it.
Strict Standards: Meeting EFTA’s technical and environmental standards can be expensive, particularly for MSMEs.
Investment Uncertainty: The $100-billion figure is an investment objective, not guaranteed money already flowing into India. Actual investment will depend on business conditions, regulations and project viability.
Uneven Benefits: Large and technologically capable companies may benefit faster than smaller firms unless targeted support is provided.
Implementation Gap: The success of TEPA depends not only on the agreement itself but also on customs, regulators, state governments, export agencies and businesses implementing it effectively.

Way Forward

Convert Market Access into Export Capacity: Help Indian firms, especially MSMEs, improve quality, technology, certification, packaging and logistics so that tariff benefits become actual exports.
Use EFTA Investment for Technology Upgradation: Prioritise investment in advanced manufacturing, pharmaceuticals, clean energy, precision engineering and R&D.
Build an MSME Support System: Provide affordable testing, certification, finance and market intelligence so small firms can enter EFTA markets.
Link Investment with Jobs and Value Addition: Ensure that foreign investment creates local jobs, domestic sourcing, skill development and technology transfer, rather than only increasing imports or assembly.
Measure Real Outcomes: Track TEPA through Indian exports, realised investment, employment, technology transfer and domestic value addition, rather than simply measuring the total value of bilateral trade.