Wednesday 08 / October / 2025
New Delhi: On 1 October 2025, the India–European Free Trade Association (EFTA) Trade and Economic Partnership Agreement (TEPA) formally came into effect, marking a landmark in India’s trade diplomacy. The EFTA bloc, comprising Switzerland, Norway, Iceland, and Liechtenstein, represents a cluster of small but highly advanced European economies with world-leading standards in technology, innovation, and investments
The pact has been hailed as a potential USD 100 billion gateway to European markets, promising not just tariff relief but also a deeper integration of India’s manufacturing and services sectors with the developed economies of Europe. It arrives at a critical juncture when the global economy faces geopolitical fragmentation, trade disruptions, and a restructuring of supply chains away from over-dependence on single markets.
A pact of promise amid geopolitical headwinds
The India–EFTA TEPA is the first comprehensive free trade agreement that India has concluded with a group of advanced European economies. It goes beyond traditional tariff negotiations to encompass investment facilitation, mobility of professionals, sustainability, and cooperation in emerging areas such as technology and green innovation.
At its core lies a bold investment objective, EFTA members will seek to channel USD 100 billion in investments into India over 15 years, alongside the creation of one million direct jobs. EFTA is the strategic trust both sides have built in a global context defined by protectionism, realignment, and competition for secure supply chains.
For India, the pact offers a chance to diversify its trade architecture beyond its heavy dependence on a few large partners and to position itself as a stable and rules-based destination for European business. For EFTA, which is not part of the European Union but enjoys close integration with its market, India provides a large, youthful, and increasingly open economy that can serve as a production base for the wider Indo-Pacific.
Amid shifting geopolitical currents, the US–China, Russia–Europe tensions, and the growing importance of “de-risking” global trade, this pact symbolizes strategic reassurance. It signals that economic pragmatism and shared opportunity can still prevail over fragmentation.
Tracing the bilateral trade trajectory
Over the past five years, India’s trade with the EFTA bloc has displayed both potential and volatility. A closer look at the data shows the contours of this evolving relationship. India’s exports to EFTA have remained modest, hovering between USD 1.7 billion and USD 3 billion annually, small relative to India’s total merchandise exports exceeding USD 450 billion. Imports from EFTA are far larger and more volatile, influenced heavily by the value of gold imported from Switzerland and high-end machinery, instruments, and pharmaceutical products.
The spike in trade trajectory in FY 2021–22 was driven largely by exceptional gold flows; subsequent years normalized. In FY 2024–25, total bilateral trade reached USD 24.41 billion, with India exporting roughly USD 1.97 billion worth of goods and importing over USD 22 billion.
The TEPA’s implementation now offers a framework to rebalance this equation. By reducing tariff and non-tariff barriers, streamlining customs procedures, and recognizing professional qualifications, it aims to help Indian exporters move up the value chain and gain more predictable access to European consumers.
The composition of trade complementarities
India’s exports to EFTA primarily consist of pharmaceuticals, organic chemicals, engineering goods, textiles, leather products, and processed foods. Indian pharmaceutical companies, are major suppliers of generics to the EU and North America, see EFTA as a niche but lucrative market, especially Switzerland and Norway, where regulatory clarity and strong healthcare spending create steady demand.
India’s imports, on the other hand, highlight EFTA’s technological and financial prowess. Switzerland’s exports of precision instruments, watches, and industrial machinery dominate the basket, alongside medical devices, optical equipment, and chemical intermediates. Norway contributes marine products, oilfield equipment, and green technologies, while Iceland and Liechtenstein specialize in energy solutions.
This pattern of high-value imports and mid-value exports explains India’s consistent deficit with the bloc. Yet it also reveals complementarity rather than competition: EFTA’s strengths in precision manufacturing and India’s expanding base in scalable production can create new synergies. Under TEPA, these synergies could translate into co-production arrangements, technology partnerships, and export-oriented clusters within India serving European markets.
The investment imperative: from aspiration to execution
The pact’s investment provision commits EFTA members to aim for cumulative investments of USD 100 billion in India over the next fifteen years, with a mid-term target of USD 50 billion in the first decade. TEPA focuses on promotion, facilitation, and periodic monitoring, reflecting India’s modern FTA philosophy that prioritizes regulatory sovereignty while ensuring investor comfort.
Historically, Switzerland has been the largest EFTA investor in India, with FDI exceeding USD 10 billion since 2000, largely in pharmaceuticals, banking, and precision tools. Norway’s sovereign funds and companies have invested in renewables and maritime infrastructure, while Iceland and Liechtenstein have niche footprints in geothermal and financial technology.
As India offers stable taxation, policy transparency, and efficient project clearances, TEPA will build strong investor confidence. The promised investment monitoring mechanism and potential future bilateral investment treaties will help and ensure that the USD 100 billion objective materializes in sectors that generate real industrial depth and employment.
A gateway to Europe: the futuristic outlook
The EFTA agreement is India’s strategic foothold into Europe’s high-income markets through a bloc that, though small, is deeply connected to the EU’s supply chains. The potential benefits are substantial. Lower tariffs will improve India’s cost competitiveness in pharmaceuticals, engineering goods, and processed foods. Simplified origin rules and customs procedures will cut transaction times and logistics costs. Services liberalization and digital trade provisions will help Indian IT, healthcare, education, and audiovisual firms expand in Europe.
For EFTA investors, India offers scale, growth, and talent. Their investments in clean energy, med-tech, biotechnology, and advanced manufacturing will help build globally competitive clusters in India aligned with European quality standards. Over time, these hubs will export not only to EFTA but also to the broader EU and OECD markets. TEPA will strategically serve as a template for future India-EU agreement, demonstrating that India can engage with advanced economies on equal, mutually beneficial terms. In nutshell, the India–EFTA TEPA strengthens India’s trade integration with Europe, enhancing investor confidence, market access, and regulatory alignment—strategically positioning India for greater benefits under the upcoming India–EU FTA.
The timing of TEPA is economically significant. India’s overall exports of goods and services surpassed USD 800 billion in FY 2024–25, the highest in its history. Yet much of this trade remains concentrated in a handful of markets, the United States, the UAE, and parts of East Asia. Europe, despite being India’s second-largest continental trading partner, remains under-penetrated relative to its purchasing power.
EFTA’s economies, while small in population, have some of the highest per-capita incomes and innovation indices in the world. They are home to global leaders in pharmaceuticals, financial services, precision instruments, and sustainability technology-areas where India seeks both investment and partnership. Moreover, EFTA’s regulatory frameworks are transparent and predictable, making it an ideal bridgehead for Indian companies seeking deeper access to Europe.
At a time when multilateral trade negotiations are stalled and the world is fragmenting into competing trade blocs, India’s proactive bilateralism, seen also in its agreements with the UAE, Australia, and now EFTA, is a conscious strategy to embed itself in global value chains through diversified partnerships.
From promise to performance
The India EFTA TEPA is both a symbol and a strategy, a symbol of India’s arrival as a confident global trade negotiator and a strategy to leverage that confidence into tangible industrial outcomes. Its entry into force on 1 October 2025 begins a 15-year journey that will reshape India’s economic footprint in Europe.
India’s consistent policy, reliable infrastructure, and continued reform of its logistics and customs regimes will strengthen performance of the agreement. EFTA TEPA will indeed become a USD 100 billion gateway, not only in investment flows but in ideas, innovation, and mutual prosperity. It will stand as example that amid global uncertainties, collaboration grounded in trust, openness, and shared growth remains the most reliable route to economic resilience.
