Why in NEWS
The Trade and Economic Partnership Agreement (TEPA) between India and the European Free Trade Association (EFTA) nations (Iceland, Liechtenstein, Norway, and Switzerland) will come into effect on 1st October 2025.
Key Terms/Concepts
| Term | Explanation |
|---|---|
| TEPA | A Free Trade Agreement between India and EFTA aiming at trade promotion, investments, and job creation. |
| EFTA | European Free Trade Association – an intergovernmental organization of Iceland, Liechtenstein, Norway, and Switzerland. Not part of the EU. |
| Tariff Lines | Product categories on which specific import/export tariffs are imposed. |
| MRAs | Mutual Recognition Agreements – recognition of professional qualifications across borders. |
| Evergreening of Patents | Strategy where companies extend patent life by making minor changes, thus delaying generics. |
News Summary
| Aspect | Details |
|---|---|
| Signed on | 10 March 2024, after 21 rounds of negotiations since 2008. |
| Coming into Force | 1 October 2025 |
| Objective | Enhance trade, reduce tariff and non-tariff barriers, boost investment, generate 1 million jobs in India. |
| Strategic Investment | EFTA to invest $100 billion in India (2025–2040), with $50 billion in the first 10 years. |
| Tariff Concessions | EFTA: 92.2% tariff lines covering 99.6% of India’s exports India: 82.7% tariff lines covering 95.3% of EFTA exports |
| Duty-Free Access | Indian rice (basmati and non-basmati) to get duty-free access without reciprocity |
| Exclusions & Safeguards | Sensitive sectors like dairy, soya, coal, and PLI-linked sectors excluded Sovereign wealth funds exempted from FDI obligations |
| Services & Mobility | Covers IT, education, sports, culture; MRAs in nursing, accountancy, architecture |
| Legal/IPR Provisions | 14 chapters; India may revoke tariff concessions if investment commitments not met; generic drugs protected from evergreening |
India–EFTA Trade Snapshot
| Parameter | Details |
|---|---|
| 2024–25 Trade Volume | $24.4 billion |
| India’s Exports to EFTA | $1.96 billion |
| India’s Imports from EFTA | $22.45 billion |
| Major Imports | Gold, silver, coal, pharmaceuticals, vegetable oil, dairy machinery |
| Major Exports | Chemicals, iron and steel, yarn, gold, precious stones, bulk drugs |
| Largest EFTA Trading Partner | Switzerland |
| Investment Facilitation | India–EFTA Desk by Invest India as a single-window platform |
Key Challenges in India–EFTA Relations
| Challenge | Description |
|---|---|
| Trade Deficit | High due to gold imports, especially from Switzerland. |
| Data Exclusivity in Pharma | EFTA’s push for data exclusivity could hinder India’s generics industry. |
| IPR Provisions | Concerns about dilution of pre-grant opposition and impact on public health access. |
In a nutshell
Memory Code – “100B TEPA-RICE-GOLD”
→ $100B investment, TEPA launch, Rice duty-free, Gold trade balance issue.
Prelims Questions
- Which of the following countries is NOT a member of the European Free Trade Association (EFTA)?
(a) Switzerland
(b) Norway
(c) Austria
(d) Iceland - What is the strategic investment commitment made by EFTA under TEPA?
(a) $50 billion over 15 years
(b) $100 billion over 10 years
(c) $100 billion over 15 years
(d) $200 billion over 20 years - Which of the following sectors is excluded from India-EFTA TEPA?
(a) Pharmaceuticals
(b) IT Services
(c) Dairy
(d) Education
Mains Questions
- How does the India–EFTA TEPA address India’s trade and investment goals while safeguarding public health and strategic sectors? (GS2 – International Relations)
- Discuss the significance and challenges of Intellectual Property Rights (IPR) provisions in recent trade agreements like TEPA. (GS3 – Science & Tech / Economy)
Prelims Answer Key
| Q No. | Answer | Explanation |
|---|---|---|
| 1 | (c) | Austria is part of the EU, not EFTA. |
| 2 | (c) | EFTA committed $100 billion over 15 years. |
| 3 | (c) | Dairy sector is among the excluded sensitive sectors under TEPA. |
