India's ambitions for strengthening its economic ties with the European Free Trade Association (EFTA) are close to fruition, with sources indicating that a free trade agreement (FTA) between the two parties, promising substantial investments and job creation, is nearing formalization.
The proposed FTA, which has been in negotiations since October 2016, has reached an advanced stage, with commitments of $100 billion in investments from the EFTA countries into India over the next 15 years. This substantial inflow of capital is projected to generate an estimated one million jobs.
"This is the first FTA for India where it has been able to get a commitment on investment and employment from the partner nations. The EFTA countries are looking at investing in joint ventures in areas such as pharmaceuticals, especially medical devices, certain chemicals, food processing, and engineering products," disclosed an official closely monitoring the negotiations.
The sectors earmarked for investment are strategically chosen to minimize competition with domestic industries. For instance, the EFTA countries have agreed to invest in areas where India's market is currently dominated by imports, such as medical devices primarily sourced from China.
By diversifying imports and expanding domestic production capacity, the pact aims to strengthen India's economic resilience and reduce dependency on foreign markets.
The FTA, encompasses various chapters covering trade in goods, rules of origin, trade in services, investment promotion, cooperation, trade and sustainable development, and customs and trade facilitation.
India's exports to the EFTA bloc in 2023 amounted to $1.87 billion, comprising chemicals, pharmaceuticals, apparel, pearls, and semi-precious stones. In contrast, imports from the EFTA countries stood at $20.45 billion, with significant inflows of pearls, precious metals, and coins.
Addressing concerns over the impact of the FTA on India's generic drugs industry, a senior government official reiterated India's commitment to safeguarding its domestic interests. Though, the demand for data exclusivity provisions, which could potentially undermine India's generic drugs sector, has been rejected in the negotiations with the EFTA bloc.
