The $100 Billion India–EFTA Trade Deal: What It Means for India and Its Business Landscape.

The $100 Billion India–EFTA Trade Deal: What It Means for India and Its Business Landscape

Starting October 1, 2025, India's new trade agreement with the European Free Trade Association (EFTA) officially comes into force. This landmark pact, called the Trade and Economic Partnership Agreement (TEPA), was signed on March 10, 2024, and covers Switzerland, Norway, Iceland, and Liechtenstein—the four EFTA nations. While it promises consumers cheaper Swiss chocolates and watches, the deal’s significance extends far beyond these products, bringing a rare $100 billion investment commitment over 15 years—unprecedented in India's trade history.

Tangible Benefits for Indian Consumers

Indian shoppers stand to gain from several tariff reductions phased in over the next decade:

• Swiss-made watches, chocolates, biscuits, and clocks will see gradual customs duty cuts, leading to lower retail prices.
• Tariff reductions will also apply to wines, apparel, and cut and polished diamonds.
• Over time, duties will fall on a wide variety of products, including Swiss machinery, medical equipment, fish oils, and smartphones.
• India will immediately drop tariffs to zero on many medicines, dyes, and industrial goods.
• Within the next 5 to 10 years, tariffs will also disappear on products such as tuna, olive oil, and medical devices.

Export Opportunities and Investment Commitments. 

The agreement is balanced with substantial benefits for Indian exporters and the broader economy:

• Indian exporters can explore expanded opportunities in diverse sectors thanks to facilitated market access.
• The true highlight is the $100 billion investment pledge—$50 billion within the first 10 years and another $50 billion in the following five years.
• This massive investment is projected to generate one million direct jobs in India.
• Uniquely, TEPA allows India to suspend tariff concessions if the promised investments don't materialize, introducing a safeguard clause unseen in prior trade agreements.

Sectoral Impact and Strategic Importance. 

According to Deloitte’s Gulzar Didwania, each EFTA member brings unique strengths:

• Switzerland dominates imports and investments, especially in sectors like precision instruments, pharmaceuticals, and finance.
• Norway and Iceland contribute through expertise in marine products, renewable energy, and specialized manufacturing.
• Liechtenstein plays a role in financial services and high-tech industries.

The agreement is India’s fifth trade pact under the Modi government, following deals with Mauritius, UAE, UK, and Australia. Meanwhile, talks continue with major partners like the US and the EU.

Broader Business Industry Context

This deal marks a key strategic shift for India’s trade and investment landscape:

• It diversifies India’s trade partnerships beyond existing strongholds, mitigating risks of over-dependence on single markets.
• The large-scale foreign direct investment (FDI) commitment fosters technology transfer, infrastructure development, and innovation.
• Job creation potential supports domestic economic growth and helps India meet rising employment demands.
• For the business community, it means enhanced access to advanced European technologies and capital, boosting competitiveness in sectors like pharmaceuticals, precision manufacturing, and renewable energy. 
• Indian exporters gain from reduced tariffs, making their products more price-competitive in high-value European markets.
• The safeguards in place ensure accountability and tangible results from foreign investors.

Trade Numbers and Challenges

In 2024-25, India’s exports to EFTA reached $1.97 billion, while imports stood at $22.44 billion, resulting in a significant trade deficit of $20.47 billion. Switzerland accounts for nearly all imports, primarily gold and luxury goods. On the investment front, Switzerland has contributed $10.87 billion in FDI since 2000, dwarfing figures from Norway, Iceland, and Liechtenstein.

This imbalance highlights challenges ahead in boosting Indian exports while managing imports. However, the new agreement's focus on investment and job creation may help balance trade relationships over time.

This historic India–EFTA trade deal combines consumer benefits, export potential, and massive investment inflows. By fostering technology and capital exchange between the regions, it sets the stage for stronger economic ties and business growth, potentially transforming key sectors in India’s economy for years to come.