The last few months have seen a flurry of trade activity for India. From the imposition of aggressive tariffs by the United States, to a free trade agreement with the United Kingdom, and a record investment pledge from Japan, India has seen new frontiers open up. And now, it’s with the European Free Trade Association.
In March 2024, India and the four-nation European Free Trade Association (EFTA) — a group of four countries consisting of Switzerland, Norway, Iceland, and Liechtenstein — signed the Trade and Economic Partnership Agreement (TEPA). The agreement came into force on October 1st 2025, after completing ratification formalities.
This deal is significant for several reasons. It is India’s first comprehensive trade agreement with a European bloc, and uniquely, it includes a binding investment commitment from EFTA to channel USD 100 billion into India over 15 years, along with a target to generate 1 million direct jobs. In short, TEPA is not just about tariff cuts — it is intended as a vehicle for deeper trade, investments, services, and supply-chain integration between India and the
EFTA states.
Key highlights and takeaways
Here are the major features and takeaways of the India-EFTA TEPA:
- Tariff liberalisation on goods: EFTA has agreed to cut tariffs on 92.2% of its products, which covers almost all of India’s exports (99.6%). This includes all industrial goods and some processed agricultural items. India, in turn, will lower tariffs on 82.7% of its products, covering 95.3% of what EFTA exports to India. Both sides have carved out “sensitive” lists. For India, certain agricultural products like dairy, soya, coal, some crops and gold imports remain excluded. Since more than 80% of EFTA’s exports to India are gold, and gold duties are untouched, the impact is limited there.
- Services: TEPA will boost India’s services exports in areas like IT, business consulting, education, culture, sports, and audio-visual services. EFTA has agreed to allow easier digital delivery of services (online work); permit greater commercial presence for Indian companies setting up there; and give easier access to temporary skilled workers. The pact also enables mutual recognition agreements in professional fields such as nursing, accountancy, and architecture.
- Intellectual property: On intellectual property, TEPA stays aligned with global TRIPS (Trade-Related aspects of Intellectual Property Rights) standards. India ensured that its strengths in generic medicines are protected and that concerns over evergreening of patents were addressed, even while recognising Switzerland’s strong IPR system.
- Investment commitment: A notable feature is the investment commitment: EFTA countries will aim to invest USD 100 billion in India over 15 years. In fact, the pact contains a mechanism that allows India to adjust or withdraw certain tariff concessions if the investment objectives are not met.
What gets cheaper for Indian consumers?
One of the more visible and immediate impacts of TEPA is on prices of certain imported goods from EFTA countries, especially high-end and niche products. The following is a breakdown of what could become cheaper and how.
- Swiss chocolates, watches, premium confectionery: These have been frequently cited in media as among the first categories to see duty reductions under TEPA. As duty cuts are phased in over years, the retail price of imported Swiss chocolates and luxury Swiss watches is expected to decline in India. The Economic Times reports that chocolate, watches, and other luxury items from Switzerland may see lower duties phased over a ten-year horizon.
- Specialty food, wines, processed agricultural goods: Select processed food items, wines, cheese, or niche agricultural products from Switzerland or other EFTA states may come under concession schedules. However, broad categories of basic agricultural products remain largely protected, so staples like bulk grains, dairy, or staples won’t see dramatic tariff cuts.
- Electronics and precision instruments: Some high-end electronics, optical instruments, machinery components, and precision parts could benefit from lowered import tariffs. For example, parts or components from Swiss or Norwegian firms (for medical devices, optics, sensors) may see cost pressures ease.
- Intermediate inputs and capital goods: Firms importing machinery, parts, and capital equipment from EFTA nations could benefit from lower duties, and some of these cost savings may pass indirectly to consumers if production costs decline. For example, precision machinery, optical lenses, machine tools, and special components might see eased import duties.
How Indian industries and sectors will benefit
While consumers may notice benefits via lower prices for certain imports, the more durable and structural benefits of TEPA are expected to accrue to Indian industries and exporters.
Here’s how:
- Expanded access to EFTA markets: Indian firms will gain preferential or duty-reduced entry into EFTA markets, which can promote exports of textiles, leather goods, chemicals, pharmaceuticals, organic chemicals, processed food, machinery, and more. The large share (99.6 %) of India’s export lines covered by tariff concessions suggests broad potential. Exporters of organic chemicals, pharmaceuticals, processed food, machinery, textiles, and agro-processed goods stand to benefit especially.
- Supply chain integration and diversification: Indian firms may source intermediate goods or components more competitively from EFTA countries, boosting efficiency and reducing reliance on China or other supply chains. More robust linkages with EFTA firms (in technology, precision engineering, research & development) could elevate local value addition in high-end manufacturing.
- Attracting foreign direct investment (FDI): The $100 billion investment pledge is intended to catalyse new industrial capacity, joint ventures, technology transfers, and fresh capital inflow into Indian manufacturing, infrastructure, and R&D. The linked mechanism allowing India to review tariff concessions if investment goals are unmet adds credibility to the investment side of the pact.
- Services and professionals: Indian services providers (in finance, insurance, IT, consulting) may find better access to EFTA markets under the services and mutual recognition provisions. Plus, the agreement has provisions for the movement of service suppliers (known as Mode 4), which should make it easier for Indian technical personnel to enter EFTA member countries for maintenance, installation, and after-sales services.
A strategic shift
The India-EFTA TEPA is expected to bring enduring gains—from stronger, more integrated supply chains and higher trade and investment flows, to the creation of new jobs and steady economic growth. By improving market access and simplifying customs procedures, it will make it easier for businesses in both India and EFTA to expand into each other’s markets.
The agreement marks a significant milestone in India’s trade diplomacy. It is India’s first major trade agreement with a European grouping, and it signals India’s ambition to deepen trade linkages with advanced economies outside traditional partners. The deal fits into India’s broader strategy of “diversifying” global value chains and strengthening its position in global trade, especially as countries seek alternatives to China in supply chains. India-EFTA TEPA combines tariff liberalisation with a novel investment commitment mechanism, and may reshape trade and investment flows between India and EFTA nations.
Sources
India-EFTA Trade and Economic Partnership Agreement (TEPA)
TRADE AND ECONOMIC PARTNERSHIP AGREEMENT BETWEEN THE EFTA STATES AND THE REPUBLIC OF INDIA
EFTA and India sign Trade and Economic Partnership Agreement
India-EFTA Trade Deal To Come Into Effect On Oct. 1: Official
A Step into the Right Direction: The India-EFTA Trade Agreement
India | European Free Trade Association
India – EFTA Economic Partnership Agreement | EY – Switzerland
A Primer on the India-EFTA Trade and Economic Partnership Agreement (TEPA) | Edelman Global Advisory