Mains Practice Questions

Approach :

• Briefly introduce the India- EFTA (European Free Trade Association) Agreement.
• Discuss the key economic and strategic dimensions of this agreement .
• Highlight the key challenges related to India- EFTA Relations.
• Conclude with a suitable way forward,

Introduction:

The European Free Trade Association (EFTA), comprising Switzerland, Norway, Iceland, and Liechtenstein, is a small yet economically robust bloc. India’s strategic balancing focuses on cultivating diverse economic and political relationships to preserve strategic autonomy while avoiding overdependence on any single power centre. Though modest in size, EFTA’s high-tech economies can serve as a “silent anchor” for India’s strategic and economic stability in an increasingly multipolar world.

Body :

The Key Economic and Strategic Dimensions of this Agreement:

• Strategic Investment Commitment: EFTA will invest USD 100 billion in India over 15 years — USD 50 billion in the first 10 years and another USD 50 billion in the next 5 years — to create 1 million jobs.
• Market Access & Tariff Concessions:
  • EFTA offers 92.2% tariff lines, covering 99.6% of India’s exports (non-agricultural and processed agri-goods).
  • India offers 82.7% tariff lines, covering 95.3% of EFTA exports, including gold (no change in effective duty).
  • Indian rice (basmati and non-basmati) to get duty-free access without reciprocity.
• Safeguards & Exclusions:
  • Sensitive sectors like dairy, soya, coal, and PLI-linked sectors are excluded.
  • Sovereign wealth funds are exempted from FDI obligations.
• Services & Mobility:
  • Supports Indian services in IT, education, culture, and sports.
  • Enables Mutual Recognition Agreements (MRAs) in nursing, accountancy, and architecture.
• Legal Framework & IP Protection:
  • India can withdraw tariff concessions if investment targets aren’t met.
  • Generic drug production is protected; evergreening of patents addressed.

Key Challenges Related to India–EFTA Relations

• Persistent Trade Deficit: India has a large trade deficit with EFTA, mainly due to gold imports from Switzerland.
• Data Exclusivity & Public Health: EFTA’s demand for data exclusivity in pharma could hinder India’s generic drug production.
• IPR Concerns under TEPA: TEPA’s IPR provisions may weaken India’s patent safeguards by affecting pre-grant opposition and local manufacturing requirements.

Way Forward

• Reduce trade deficit via value-added exports and diversified trade basket.
• Leverage EFTA expertise in clean tech, sustainability, and skills for the green transition.
• Maintain balanced IPR to protect innovation and public health.
• Build on India–EU FTA to enhance regulatory alignment, tackle Non-Tariff Barriers (NTBs), and boost supply chain resilience.

Conclusion:

As political scientist Joseph Nye notes, “Power in the twenty-first century is less about control and more about connection.” The India–EFTA partnership, though small in scale, acts as a silent anchor in the multipolar order, fostering strategic balance, economic diversification, and technological cooperation — provided that trade imbalances, IPR concerns, and public health safeguards are addressed with strategic foresight.