India is close to finalizing a first-of-its-kind trade agreement under which European Free Trade Association (EFTA) countries will invest up to $100 billion over 15 years in exchange for easier trade access to the world's most populous country. Bloomberg reports this.
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EFTA, which includes Switzerland, Norway, Iceland and Liechtenstein, has committed to invest in India as part of a trade pact that is being negotiated in its final stages.
Details
For EFTA countries, the agreement, 16 years in the making, will allow producers to export processed food and beverages, electrical equipment and other engineering products at reduced tariffs to a potential market of 1.4 billion people. The agreement is also likely to benefit the bloc's pharmaceutical and medical device industries.
The agreement will also ensure easier movement of Indian professionals to EFTA countries and market access for some agricultural products.
India wants a $100 billion investment commitment to be legally binding. However, one European official said the amount would likely be determined as a target without legal mechanisms to force investment.
If an agreement is reached, it would be the first time India has guaranteed investment commitments of this nature under the agreement about free trade.
Investments from private businesses
Investment in India from EFTA countries will mostly come from private businesses and will be directed towards existing and new enterprises. At the same time, this will create more than 1 million jobs in India.
Switzerland is India's largest commercial partner among the members of the EFTA bloc, which includes European countries that are not members of the European Union. Switzerland's two-way trade with India was $17.14 billion in fiscal year 2022-23, from $18.66 billion with the entire EFTA group.
India is attracting investor interest from several countries as companies look to diversify their supply chains from China and are looking for new markets for growth.
The United Arab Emirates is also considering investing $50 billion in India.
Expectations for economic growth
India expects its economy to grow will grow by about 7% in the fiscal year starting in April, making it one of the fastest-growing major economies in the world.
