India-European Free Trade Association Trade and Economic Partnership Agreement (TEPA) came into effect

Syllabus :GS3/Economy

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India-European Free Trade Association(EFTA) Trade and Economic Partnership Agreement (TEPA) came into effect .

The India-EFTA Trade and Economic Partnership Agreement (TEPA)

• TEPA is a modern and ambitious agreement that incorporates, for the first time in any Free Trade Agreement (FTA) signed by India, a commitment linked to investment and job creation.
  • The agreement was signed in March 2024 at New Delhi.
• It comprises of 14 chapters with main focus on market access related to goods, rules of origin, trade facilitation, trade remedies, sanitary and phytosanitary measures, technical barriers to trade, investment promotion, market access on services, intellectual property rights, trade and sustainable development and other legal and horizontal provisions.

Key features of the agreement

• Market Access: EFTA has committed to 100% tariff elimination on non-agricultural goods and concessions on processed agricultural products, covering 99.6% of India’s exports.
  • It aims to attract USD 100 billion in foreign direct investment over 15 years and generate 1 million direct jobs in India.
• India’s Offer: Covers 82.7% of tariff lines (95.3% of EFTA exports), with protections for sensitive sectors like pharma, food, dairy, and gold.
• Services & Mobility: India and EFTA offer market access in over 100 sub-sectors. Agreement allows for digital service delivery, commercial presence, and temporary stay of professionals.
  • Enables Mutual Recognition Agreements in professions like nursing and accountancy.
• Intellectual Property: The agreement upholds TRIPS-level IPR standards, safeguards India’s generic medicine interests, and promotes sustainable development. 
• Sustainability & Skills: Focus on sustainable development, vocational training, and technology collaboration in fields like health sciences, renewables, and R&D.
• Sectoral Gains: Indian exporters in machinery, chemicals, textiles, and processed foods will benefit from lower tariffs and easier access to EFTA markets.

 Importance

• Strategic European Engagement: EFTA is one of three key European economic blocs alongside the EU and UK.
  • EFTA’s advanced economies, especially Switzerland and Norway, offer strong potential in finance, engineering, food, and health sciences.
• Boost to Exports: Sectors like machinery, chemicals, textiles, and processed foods gain improved access to high-value European markets.
• Job Creation & Skill Development: TEPA is expected to catalyze employment and enhance India’s human capital.
• Strengthened Bilateral Ties: Especially with Switzerland, India’s largest EFTA trading partner.

 Challenges

• Sensitive Sector Protection: India has excluded or cautiously negotiated sectors like pharma, dairy, coal, and processed food.
• Sensitive sectors protected, including pharma, medical devices, processed food, dairy, soya, coal, and sensitive agricultural products
• Trade Imbalance: Over 80% of EFTA exports to India are gold, raising concerns about reciprocal trade benefits.
• Implementation Complexity: Coordinating across diverse sectors and regulatory frameworks may pose hurdles.
• Limited Market Size: EFTA’s population is small, though its GDP large 

 Conclusion and Way Forward 

• TEPA positions India as a hub for innovation, manufacturing, and global trade and  opens doors for Indian exporters and symbolizes a new phase in India-Europe relations driven by growth, technology, and sustainability.
• TEPA represents a transformational shift in India’s trade diplomacy—integrating market access, investment, and employment into a single framework.
•  TEPA enhances market access for goods and services, strengthens intellectual property rights, and fosters sustainable, inclusive development, while supporting Make in India and Atmanirbhar Bharat initiatives.

Source :PIB