The India-EFTA pact’s highlight is its investment aspect
In many ways, the recently concluded agreement between India and the European Free Trade Association (EFTA) is mainly a confidence building measure for India in the run-up to trade agreements likely to be pursued after general elections with the EU and UK. In most cases, the I-EFTA pact will have limited impact—India’s principal import from the four-nation group, gold, is not subject to pre-determined tariff reductions, while agricultural imports are excluded.
On the Swiss side, most tariffs are fairly low, so additional trade gains will be limited, except possibly in areas like textiles. Also, gold imports will continue as inputs for our principal exports to Switzerland (and the world) of gold and diamond jewellery.
So, enormous gains in commodity trade with EFTA are not the plan. However, the tariff reductions agreed will certainly impact our UK and EU talks.
In services, some new ground may be expected, as there are hints of moving beyond the usual access bargaining for skilled Indian professionals, an area where some agreement seems to have been reached in pre-negotiations with the EU and UK. At this point of demographic change and ageing in most countries of the West, it is likely that such agreements will be swiftly signed with other countries as well; they need Indian professionals just as much as India needs to export surplus skilled labour.
There is, however, a hint of the promotion of new aspects of trade in services, with a pact on establishing mutual recognition agreements (MRAs) in fields like nursing and education. How this proceeds is still to be seen, but if our history with Singapore is any guide, MRAs do not get too far until a prior agreement on a framework for the determination of MRAs is defined.
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