New Delhi
India and the European Free Trade Association (EFTA) states are awaiting a political go-ahead to unveil a free trade agreement, even as British negotiators have arrived in New Delhi to give a push to a proposed trade deal though the probability of it being finalised before the Indian election remains low.
After intense negotiations, a mutually agreeable draft of the deal is on the table and awaiting approval from India and the four members of EFTA, Iceland, Liechtenstein, Norway and Switzerland, people aware of developments said on condition of anonymity.
In a separate development, a team of British negotiators arrived in New Delhi on Tuesday to give a push to negotiations on an FTA with India, which has stalled in recent weeks because differences on issues such as tariffs for alcohol, access to the Indian market for automobiles, especially electric vehicles, and India’s demand for greater mobility for its professionals in the UK.
In contrast, while talks on the India-EFTA deal began in January 2008, they gathered pace following their revival last year after being put on hold in 2013.
“It is a win-win deal for both and covers wide-ranging matters such as trade in goods and services, rules of origin, intellectual property rights (IPR), investment promotion, trade facilitation and sustainable development,” one of the people cited above said.
{{/usCountry}}“It is a win-win deal for both and covers wide-ranging matters such as trade in goods and services, rules of origin, intellectual property rights (IPR), investment promotion, trade facilitation and sustainable development,” one of the people cited above said.
{{/usCountry}}“The proposed deal between India and EFTA – the Trade and Economic Partnership Agreement (TEPA) – is expected to help India bridge a huge gap in the balance of trade, which is in favour of the European nations,” the person added. During 2023, India’s trade deficit with the EFTA states was more than $18.57 billion.
An official from an EFTA states said both sides have been anticipating the finalisation of the TEPA for the past few weeks. “We are positive and optimistic,” the official added.
Both sides understand the sensitivities of each other and are willing to expand the volume of trade beyond gold. In recent negotiations, EFTA members toned down their demands on IPR and took on board India’s demand for including a commitment on long-term investments, provided it was non-binding, the people said.
According to government data, India’s exports to the EFTA region during January-December 2023 was $1.87 billion, while its imports from the bloc of countries that aren’t members of the European Union (EU) was in access of $20.45 billion, with Switzerland’s share alone pegged at $19,65 billion due to gold purchases.
In the case of gold imports, India may allow a quota-based concessional duty regime for EFTA states on the lines of an existing arrangement with the United Arab Emirates (UAE).
Prospects for early conclusion of the negotiations brightened after the 21st round of negotiations in New Delhi during January 8-13, the people said. Before these talks, the two sides held a meeting in Geneva during November 20-29. Senior ministers of EFTA states who attended the Raisina Dialogue last month made a concerted push for finalising the TEPA.
Though there is no deadline for the trade pact, both sides want to conclude it as soon as possible, even before India enters its election cycle, a second person said.
A comprehensive deal will also be a win-win for both as EFTA can rely on India for friend-shoring and New Delhi will be able to increase its exports to achieve an even balance of trade, he added.
India’s key imports from the four countries are gold ($20.7 billion in 2021-22), silver, coal, pharmaceuticals, vegetable oil, dairy machinery, medical items, crude and scientific equipment. It exports chemicals, iron and steel, gold, precious stones, yarns, sports goods, glassware and bulk drugs to these nations.
As for the UK deal, the people said the British negotiators wanted to give a push to the trade talks with the hope of forward movement on the FTA but acknowledged that the probability of any immediate breakthrough before India goes into the election cycle remains low.
Given the widespread impression that the opposition Labour Party will win the next UK election, there is apparently little appetite in New Delhi to take forward the trade deal, which former British premier Boris Johnson had hoped to ink by Diwali in October 2022.