Cabinet may consider EFTA, deal likely to be announced Sunday
NEW DELHI : The Union cabinet was expected to take up the draft agreement with the European Free Trade Association (EFTA) on Thursday, paving the way for a potential announcement on Sunday, two persons aware of the development said.
This deal could be the first formally signed free trade agreement among India’s ongoing trade negotiations. FTA negotiations with Oman and the UK are also in the final stages.
The cabinet meeting, held on Thursday, is expected to be the last before the Election Commission announces polling schedule for the general elections.
Queries emailed to the commerce secretary, cabinet secretariat, spokespersons of the prime minister office and commerce ministry on Thursday morning weren’t answered immediately.
Mint reported that the four nations making up the European Free Trade Association (EFTA) have offered duty-free market access for India’s animal products, fish, processed food and vegetable oils in a trade pact that is expected to be signed next week.
The EFTA nations–Iceland, Liechtenstein, Norway and Switzerland–have also proposed a $100 billion investment in India by their companies over 15 years, which is estimated to create about a million jobs. The two sides began negotiations for a trade treaty in 2008.
Mint earlier reported that the agreement with EFTA nations was expected to be signed as early as next week. As per the draft papers of the deal, duty-free access starts immediately and is the best offer among the other FTA partners.
As per the contours of the deal, India also offered immediate duty elimination on 40% of trade lines where trade activities were low or nil. It will allow the EFTA nations to export their goods and services without any tariff obligation, the first person said.
India’s exports to the EFTA countries in FY24 (April 2023-January 2024) were at $1.87 billion, including items like chemicals, pharmaceuticals, apparel, and pearls, precious and semi-precious stones. India imported goods worth $20.45 billion from the EFTA countries in 2023, including pearls, precious or semiprecious stones, precious metals and coins valued at $16.7 billion.
The deal will also allow India’s services sector to increase its share of exports to Switzerland and Norway, which constitute a substantial share of exports to EFTA nations, the second person said.
Both nations understand the sensitivities and are willing to expand the volume of trade beyond gold. In recent negotiations, EFTA members toned down their demands on intellectual property rights, or IPR, and took on board India’s demand for including a commitment to long-term investments, provided it was non-binding.
Experts see a gain coming from the deal in the sectors of services and investment. “India is expected to get benefits of the deal in the emerging areas like government procurement and digital trade,” said Shri Ajay Sahai, Director General, the Federation of Indian Export Organisations (FIEO).
Signing the FTA will be a big achievement if things work according to plan, said Mr. Abhash Kumar, assistant professor of economics at Delhi University.