India–EFTA free trade pact: Fostering growth and cooperation

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India is on the cusp of operationalizing its groundbreaking Trade and Economic Partnership Agreement (TEPA) with EFTA countries, comprising Switzerland, Iceland, Norway, and Liechtenstein, effective October 1, 2025. This implementation follows the agreement’s signing on March 10, 2024, and represents a milestone in India’s strategy to deepen ties with key European partners.

From October 1, 2025, India will lower taxes on 80–85% of goods from EFTA countries like chocolates, watches, and electronics, over 3–10 years, making them cheaper. In return, EFTA will allow 99% of Indian goods, such as textiles and medicines, into their markets tax-free, but India’s agriculture and dairy are protected.

The deal’s highlight is EFTA’s promise to invest US$ 100 billion in India over 15 years— US$ 50 billion in the first 10 year, and US$ 50 billion later—creating 1 million jobs in manufacturing, green energy, and pharmaceuticals, with rules for fair trade and environmental protection. In this article, we analyze the India’s current trade profile with these partners, focusing on tariff reductions, market access, and opportunities to boost Indian exports and economic growth.

India is set to significantly deepen its trade relations with the European Free Trade Association (EFTA) as the long-negotiated free trade pact comes into effect from October 1, 2025. Under this agreement, India will reduce import duties on high-value Swiss goods, including luxury watches and chocolates, while gaining preferential access for its pharmaceutical, textiles, and agricultural exports. This development is expected to not only boost trade volumes but also reposition India strategically in the European market, balancing competitiveness with domestic industry safeguards.

India – EFTA trade trends

The India-EFTA trade trend from 2019-20 to 2024-25, as illustrated by data from the Ministry of Commerce, highlights a significant disparity between imports and exports. Imports from EFTA countries, predominantly Switzerland, Iceland, Norway, and Liechtenstein, have risen steadily, peaking at $25.49 billion in 2021-22 before stabilizing around $21.87 billion in 2024-25. In contrast, Indian exports to EFTA have remained relatively flat, fluctuating between $1.74 billion and $1.96 billion over the same period. This growing trade imbalance, with imports consistently outpacing exports by over tenfold, underscores the challenges India faces as it prepares to implement the Trade and Economic Partnership Agreement (TEPA) on October 1, 2025, aiming to boost exports and attract investment to narrow the gap.

In 2024-25, when it comes to product distribution, India’s exports to the EFTA countries displayed a strong presence in high-value and industrial products. Organic chemicals led the list at US$ 697.75 million, reflecting India’s robust chemical manufacturing and global competitiveness. Natural or cultured pearls followed with US$ 478 million, highlighting the luxury segment’s significance. Exports of nuclear reactors and boilers reached US$ 92.90 million, demonstrating technological and industrial capabilities. Mineral fuels and products accounted for US$ 74.39 million, while products of the milling industry contributed US$ 51.32 million, supporting food processing trade. Electrical machinery and equipment, at US$ 48.92 million, rounded out the key export categories, showcasing India’s diverse manufacturing strengths.

India’s imports in this products segment are heavily concentrated in high-value and strategic products. Natural or cultured pearls dominate, accounting for 82% of the total, highlighting India’s significant demand for luxury goods. Mineral fuels, oils, and related products follow at 3%, reflecting energy and industrial requirements. Imports of optical, photographic, cinematographic, and measuring instruments, as well as nuclear reactors and boilers, each constitute around 2%, indicating reliance on advanced technology and infrastructure components. Pharmaceutical products also account for 2%, emphasizing healthcare needs. The remaining 9% comprises various other items, showing the diversity of India’s import basket.

India – EFTA market access

India’s decision to reduce import duties on Swiss watches and chocolates, as highlighted by The Hindu BusinessLine, is a prominent feature of the India-EFTA Trade and Economic Partnership Agreement (TEPA), effective October 1, 2025. These luxury goods, emblematic of Swiss craftsmanship, carry symbolic weight, signaling goodwill and fostering stronger economic ties with the EFTA bloc (Switzerland, Iceland, Norway, and Liechtenstein).

The tariff cuts will make these high-value products more affordable for Indian consumers, enhancing market competition and variety without significantly disrupting local industries, as these sectors employ relatively few workers in India. By strategically lowering tariffs in non-sensitive areas, India strengthens its negotiating leverage to secure greater market access for its key exports, such as pharmaceuticals and textiles, which have substantial employment potential.

The India-EFTA TEPA presents significant opportunities to reshape trade and investment dynamics. With 99% of Indian goods gaining tax-free access to EFTA markets, exports in pharmaceuticals, textiles, and processed foods are poised for double-digit growth, addressing the current trade imbalance where India’s imports from EFTA (US$ 21.87 billion in 2024-25) vastly outstrip exports (US$ 1.96 billion).

The agreement also facilitates technology transfers, particularly from Swiss and Norwegian firms, in sectors like healthcare, clean energy, and engineering, bolstering India’s industrial capabilities. Furthermore, the pact encourages diversification of Indian exports into under-represented areas like processed foods and organic agriculture. By providing legal certainty and regulatory clarity, the TEPA is expected to unlock US$ 100 billion in EFTA investments over 15 years, particularly in R&D-intensive sectors, fostering job creation and economic growth while aligning with fair trade and environmental standards.

In conclusion, the India–EFTA free trade agreement represents more than just tariff reductions; it is a comprehensive framework that has the potential to strengthen India’s position in global trade and investment. The gradual narrowing of the trade deficit, the concentration of exports in pharmaceuticals, and the pivotal role of Switzerland as an investor all suggest that India already has a foundation to build upon. With the FTA in place, these trends are likely to deepen and diversify, providing opportunities for both economies.

For India, the agreement offers a chance to expand its export base, attract technology-driven investments, and secure a stronger foothold in premium European markets. For consumers, it promises access to high-quality goods at competitive prices. By combining openness with strategic foresight, India can convert this agreement into a long-term driver of growth, competitiveness, and integration into global value chains.