India’s trade deal with four European countries comes into force

This is India’s first trade deal in which market access is directly linked to these investment pledges.

Experts say this signals a strategic shift in the way trade deals are negotiated, with investment commitments and not just tariff cuts part of the deal.

For India, products like chocolates and Swiss wines are expected to become cheaper, while EFTA countries will benefit from India’s zero tariffs on many medicines, dyes, textiles and steel products over the next five to 10 years.

India’s imports from EFTA countries totaled $32.4 billion last year, most of which came from Switzerland, which accounted for a third of that figure.

Of this, gold imports accounted for around $18 billion. Under the trade deal, duties on gold remain unchanged.

India’s exports to EFTA countries in the same year amounted to $2 billion, of which 98% were industrial products.

But industrial products already face zero tariffs, so India will see no additional benefit, according to Ajay Srivastava of Global Trade Research Initiative (GTRI), a Delhi-based think tank.

“If there are any gains, it may not be due to tariffs but better collection, since this is India’s first trade deal with a European country,” Srivastava said. This will send a signal to the world that “India is ready to liberalize”.

The agreement comes into force against the backdrop of high tariffs of 50% imposed by the United States on India. Trade negotiations between the two countries are ongoing.

India is also negotiating several trade deals in an effort to offset the effect of U.S. tariffs.

In July, the country signed a free trade agreement (FTA) with the United Kingdom, which is expected to come into force by 2026.

India is also negotiating an FTA with the European Union.

Some 6,000 European companies operate in India and the European bloc is India’s largest trading partner in goods, with bilateral trade reaching $135 billion in 2022-23 and almost doubling over the past decade.

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