The Trade and Economic Partnership Agreement (TEPA) between India and the European Free Trade Association (EFTA) marks a transformative milestone in India’s economic diplomacy and strategic engagement with Europe. Signed on 10 March 2024 and operational since 1 October 2025, the agreement reflects India’s emergence as a confident global economic power negotiating balanced, future-oriented and investment-linked trade partnerships. As the pact completes two years since signing, it is increasingly being viewed as one of the most significant breakthroughs in India’s modern trade architecture and a defining step in India’s integration with advanced global economies.
The EFTA bloc comprises four highly developed European economies, namely Switzerland, Norway, Iceland and Liechtenstein. Although these nations are not members of the European Union, they possess advanced industrial capabilities, sophisticated innovation ecosystems, high purchasing power, transparent regulatory systems and globally competitive financial sectors. TEPA is India’s first comprehensive free trade agreement with a group of advanced European economies, thereby elevating the strategic importance of the pact beyond conventional tariff liberalisation. The agreement provides India with a gateway to affluent European markets and opens opportunities for deeper collaboration in technology, investment, sustainability, advanced manufacturing and innovation-driven industries.
The timing of TEPA is particularly significant in the backdrop of rising geopolitical fragmentation, disruptions in global supply chains and the restructuring of international trade patterns. The world economy is witnessing growing uncertainty arising from geopolitical tensions, including US–China strategic competition, Russia–Europe tensions, and increasing concerns about overreliance on single-market supply chains. Against this backdrop, TEPA represents strategic reassurance and demonstrates that economic cooperation grounded in mutual trust and shared prosperity can continue to thrive even amid global uncertainties. The agreement reflects India’s broader strategy of diversifying trade partnerships and positioning itself as a stable, rules-based and reliable destination for global investments.
TEPA is a critical component of the expansion of the trade architecture and highlights India’s increasing integration into global value chains. India’s evolving FTA strategy marks a shift from earlier cautious approaches towards a more proactive and confident trade diplomacy that seeks not only market access but also investments, technology transfer, resilient supply chains and long-term industrial partnerships.
One of the most remarkable features of the India–EFTA TEPA is the unprecedented investment commitment embedded in the agreement. EFTA countries have committed to facilitating USD 100 billion in investment in India over the next 15 years, with a mid-term target of USD 50 billion in the first decade. This investment commitment is accompanied by the potential creation of nearly one million direct jobs across sectors such as manufacturing, renewable energy, engineering, biotechnology, life sciences, digital technologies, logistics, research and development, and innovation-driven industries. The agreement, therefore, goes far beyond a traditional trade pact and constitutes a comprehensive economic partnership aimed at industrial transformation and job creation.
Historically, EFTA nations have maintained strong investment links with India. Switzerland alone has invested more than USD 10 billion in India since 2000, particularly in pharmaceuticals, banking, engineering and precision tools. Norway’s sovereign wealth funds and enterprises have increased investments in renewable energy and maritime infrastructure, while Iceland and Liechtenstein have explored opportunities in geothermal energy, financial technology and sustainability-focused sectors. TEPA is expected to significantly accelerate these investment flows by enhancing policy certainty, regulatory cooperation and investor confidence.
The agreement offers substantial market-access advantages to Indian exporters. EFTA countries have agreed to tariff concessions on 92.2 per cent of tariff lines, covering nearly 99.6 per cent of India’s exports. This includes full coverage of non-agricultural products and concessions on processed agricultural goods. In return, India has provided tariff commitments on 82.7 per cent of tariff lines, accounting for 95.3 per cent of EFTA exports. Importantly, India has safeguarded sensitive sectors, including dairy, soya, coal and selected agricultural products, while maintaining effective protection on gold imports. This balanced approach demonstrates India’s commitment to protecting farmers, MSMEs and domestic industries while pursuing deeper global integration.
The bilateral trade trajectory between India and EFTA economies over recent years reflects both substantial potential and structural imbalances. India’s exports to EFTA have remained relatively modest at around USD 2 billion, while imports from the bloc have been significantly higher, driven largely by gold imports from Switzerland, industrial machinery, precision instruments, medical devices and high-value industrial products. Total bilateral trade reached nearly USD 24.41 billion in FY 2024–25, with India’s exports standing at around USD 1.97 billion and imports exceeding USD 22 billion.
| India’s bilateral trade with EFTA countries | ||||
| Year | Import | Export | Total Trade | Trade Balance |
| 2020-21 | 18911.17 | 1598.67 | 20509.84 | -17312.5 |
| 2021-22 | 25491.22 | 1742.02 | 27233.24 | -23749.2 |
| 2022-23 | 16738.93 | 1926.44 | 18665.37 | -14812.49 |
| 2023-24 | 22056.37 | 1943.04 | 23999.41 | -20113.33 |
| 2024-25 | 22441.47 | 1966.84 | 24408.31 | -20474.63 |
| Source: Ministry of Commerce and Industry | ||||
Despite the trade imbalance, the bilateral trade relationship reflects complementarity rather than competition. India offers scale, cost competitiveness, skilled manpower and expanding manufacturing capabilities, while EFTA economies contribute technological excellence, advanced engineering capabilities, innovation ecosystems and capital-intensive industries. TEPA is therefore expected to convert this trade imbalance into long-term industrial partnerships, co-production arrangements and technology collaborations.
India’s exports to EFTA primarily include pharmaceuticals, organic chemicals, engineering goods, textiles, garments, leather products, marine products and processed foods. Indian pharmaceutical companies already have strong credibility in advanced markets due to their global leadership in generic medicines and healthcare solutions. EFTA markets, particularly Switzerland and Norway, offer opportunities for high-value pharmaceutical exports due to their advanced healthcare systems and stable demand patterns. India’s textile, apparel and leather sectors are also expected to benefit from improved market access and tariff reductions.
On the import side, EFTA economies are globally recognised for precision engineering, industrial machinery, watches, optical instruments, medical devices, specialty chemicals and green technologies. Switzerland’s dominance in precision manufacturing and pharmaceuticals, Norway’s expertise in the energy and maritime sectors, and Iceland’s strengths in clean energy technologies provide India with access to advanced industrial capabilities critical to its long-term industrial upgrading. These complementarities are likely to accelerate India’s transition towards advanced manufacturing and innovation-led economic growth.
The agreement also aligns closely with India’s ambitious export targets. The Government of India aims to reach USD 1 trillion in merchandise exports and USD 1 trillion in services exports by 2030. TEPA can contribute substantially to these objectives by providing stable, predictable access to European markets and encouraging export-oriented investment in India. Europe remains under-penetrated relative to its purchasing power, despite being one of India’s largest trading regions. TEPA therefore helps India deepen its economic footprint in high-income European markets while diversifying its export destinations beyond traditional partners such as the United States, the UAE and East Asia.
Another important dimension of the agreement is its emphasis on services trade, digital cooperation and professional mobility. India’s services sector has emerged as a global strength, particularly in information technology, consulting, engineering services, financial services and knowledge-intensive industries. TEPA includes provisions to strengthen cooperation in IT and IT-enabled services, digital trade, healthcare, education, audiovisual industries and professional services.
The agreement also facilitates the development of Mutual Recognition Agreements in professions such as nursing, chartered accountancy and architecture. These provisions can create substantial opportunities for skilled Indian professionals in European markets while deepening people-to-people connections between India and EFTA countries. Temporary mobility arrangements for professionals, service providers and students further strengthen the agreement’s human capital dimension.
Beyond large corporations, TEPA is also expected to benefit India’s MSMEs, start-ups, women entrepreneurs, farmers and the fisheries sector. High-income European markets demand specialised and high-quality products, areas where Indian enterprises are increasingly gaining competitiveness. Improved market access can create fresh opportunities for regional industries and local producers across several Indian states.
Maharashtra is likely to benefit from higher grape exports, agro-products and fisheries-related investments. Karnataka may gain from coffee exports and technology partnerships, while Kerala can expand exports of spices, seafood and processed foods. The North Eastern states could also see increased access to horticultural and organic products. Such geographically diversified export opportunities can contribute to inclusive economic growth and rural prosperity.
India’s ongoing logistics reforms, customs modernisation, digital trade facilitation and infrastructure expansion will therefore play a key role in securing the agreement’s long-term success. As India strengthens ease of doing business, policy transparency and industrial competitiveness, TEPA can become a major driver of export-led growth and industrial transformation.
The agreement also supports India’s long-term vision of becoming a developed nation by 2047 under the “Viksit Bharat” agenda. Export growth, industrial upgrading, technological advancement, employment generation and integration into global value chains are central pillars of this vision. TEPA directly contributes to these national priorities by deepening India’s connections with some of the world’s most advanced and innovation-driven economies.
In conclusion, the India–EFTA TEPA is far more than a conventional trade agreement. It is a comprehensive, forward-looking economic partnership that brings together trade liberalisation, investment facilitation, technology collaboration, professional mobility and industrial cooperation. The pact reflects India’s growing stature in global economic diplomacy and demonstrates the country’s growing confidence in negotiating balanced, strategic trade partnerships. With its focus on investment, jobs, innovation, exports and long-term industrial growth, TEPA has the potential to become a defining milestone in India’s engagement with Europe and a major catalyst for India’s economic transformation in the decades ahead.