EFTA Countries Sign Free Trade Agreement with India, Pledging $100 Billion Investment
ZURICH, Oct 28 (Reuters) — The European Free Trade Association (EFTA) has signed a landmark trade agreement with India, committing to invest $100 billion in the Indian market. This agreement aims to attract companies eager to leverage India’s robust economic growth, particularly as businesses shift their focus away from China.
Swiss firms like ABB and Kuehne+Nagel are already increasing their investments in India, with expectations that the new trade agreement will further enhance business opportunities. As Europe grapples with the impact of U.S.-China trade tensions and a slowing Chinese economy, India’s growth potential is becoming increasingly attractive.
The Trade and Economic Partnership Agreement (TEPA), signed in March, is set to significantly reduce tariffs on a range of exports, including Swiss chocolates, watches, and machinery, thereby encouraging further investment from EFTA countries—comprising Switzerland, Norway, Iceland, and Liechtenstein. Once ratified, this agreement will provide Swiss companies with easier access to India’s vast market of 1.4 billion people.
Morten Wierod, CEO of ABB, noted that the company’s orders in India have surged by an average of 27% annually over the past three years. In response, ABB has expanded its operations in India, completing eight projects since 2023 and increasing its workforce from 6,000 to 10,000 since 2020. Wierod highlighted that India is poised to become ABB’s third-largest market after the U.S. and China.
While no companies have indicated that their investments are solely due to the TEPA, there is optimism about its potential impact. The agreement still requires parliamentary approval and is expected to take effect in late 2025 or early 2026.
The International Monetary Fund (IMF) predicts that India’s economy will grow by 7% this year and 6.5% in 2025, surpassing growth projections for China. This shift has already resulted in India overtaking China as a destination for Swiss direct investment in 2021-2022.
Philippe Reich, chairman of the Swiss-Indian Chamber of Commerce, described the trade deal as a “game changer,” anticipating that more Swiss companies will enter the Indian market, which is currently home to around 350 Swiss firms.
The TEPA will eliminate tariffs on nearly 95% of exports, providing Swiss companies a competitive advantage over EU and UK counterparts still negotiating similar agreements with India. In exchange for the $100 billion investment over 15 years, India has promised to foster a favorable investment climate, although specific details are yet to be outlined.
Florin Mueller, head of the Swiss Business Hub in Mumbai, emphasized that the TEPA will significantly enhance India’s profile for Swiss businesses, creating a welcoming environment for investment.
Smaller firms, such as Feintool, are also making their mark, with plans to open a factory near Pune next year. Kuehne+Nagel is expanding its workforce in India and opening new logistics centers, signaling a growing commitment to the region.
In summary, the EFTA-India trade agreement is set to usher in a new era of investment and growth, positioning India as a key player in the global economy.