+91-8595390705

India – EFTA Trade and Economic Partnership Agreement

14 Mar 2024 India – EFTA Trade and Economic Partnership Agreement

Posted at 17:17h in Daily current-affairs by
0 Likes

Source – The Hindu and PIB.

General Studies – International Relations, Development of Indian Economy, India and European Free Trade Association Trade and Economic Partnership Agreement, Trade Facilitation, European Free Trade Association, Intellectual Property Rights, Trade and Sustainable Development, Investment Promotion, Make in India Program and Self – Reliant India .

 

Why in the News ?

 

  • Recently on March 10, 2024, India and the European Free Trade Association (EFTA) have signed a Trade and Economic Partnership Agreement (TEPA).
  • EFTA is an intergovernmental organization which was established in 1960.
  • Its objective is to promote free trade and economic integration to benefit its four member countries.
  • India has been working on a Trade and Economic Partnership Agreement (TEPA) with EFTA countries, which include Switzerland, Iceland, Norway and Liechtenstein.
  • The Union Cabinet chaired by the Prime Minister of India has approved the signing of TEPA with the EFTA countries.
  • It is a balanced and free trade agreement that reflects the aspirations of emerging India and new global value chains with two-way trade in goods, services, investment, innovation.
  • This is the first trade agreement of its kind for India through which India has entered into a trade agreement with any group of western countries.
  • Work on this agreement was going on since 2008, but after the departure of the UPA government, it went out of the main agenda of the Government of India.
  • This agreement facilitates and facilitates access to the European market for Indian service companies with easier visa regulations.

 

Introduction to the European Free Trade Association :

  • EFTA is an intergovernmental organization formed in 1960 to promote free trade and economic integration for the benefit of its four member countries, Switzerland, Iceland, Norway and Liechtenstein.
  • EFTA is an important regional grouping with ever-increasing opportunities to increase international trade in goods and services. EFTA is one of three important economic blocs in Europe (the other two being the EU and the UK). Among the EFTA countries, Switzerland is India’s largest trading partner, followed by Norway, which is also a major trading partner of India.
  • TEPA is a modern and ambitious bilateral trade agreement.
  • India, for the first time, is signing an FTA with one of the four developed countries in Europe, an important economic bloc that offers significant economic opportunities and promotes free trade and economic integration.

Introduction to Free Trade Agreement (FTA) :

  • A free trade agreement is an agreement made between two or more countries to reduce barriers to import and export.
  • Under a free trade policy, any goods and services can be bought and sold across international borders with little or no government customs duties or quotas or subsidies.
  • The concept of free trade is the opposite of trade protectionism or economic isolationism.

 

Highlights of India and European Free Trade Association Trade and Economic Partnership Agreement :

 

 

  • The India and European Free Trade Association Trade and Economic Partnership Agreement mainly consists of 14 chapters. Therefore, the main features of India and European Free Trade Association Trade and Economic Partnership Agreement are as follows –

To promote investment with the aim of creating direct employment :

  • EFTA will bring 100 billion dollars of investment and 10 lakh direct investment in India in the next 15 years. The target has been set to create jobs or create direct employment.
  • This historic commitment underpins a binding agreement to promote goal-oriented investment and job creation, a first in the history of the FTA. Which provides significant economic opportunities and promotes free trade and economic integration.
  • This investment does not include foreign portfolio investment.

Providing market access and tariff concessions :

  • EFTA is offering 92.2 percent of its tariff lines covering 99.6 percent of India’s exports. IFTA’s market access proposal includes 100 percent tariff concession on non-agricultural products and processed agricultural products (PAP).
  • India is offering 82.7 percent of its tariff lines covering 95.3 per cent of EFTA exports of which over 80 per cent comprises gold imports. It has been considered not to impose import duty on gold.

Ensuring regional commitments :

  • India provides access to 105 sub-regions to EFTA and ensures commitments in various sectors, including 128 from Switzerland, 114 from Norway, 107 from Liechtenstein and 110 from Iceland.
  • This takes into account the sensitivities related to PLI in sectors like pharma, medical devices and processed food etc. Whereas proposals from some sectors like dairy, soya, coal and sensitive agricultural products have been kept out of it.

Encouraging export of services and Intellectual Property Rights (IPR) : 

  • This trade agreement (TEPA) will encourage exports of key strengths or areas of interest such as IT services, business services, personal, cultural, sports and recreational services and other education services and audio-visual services.
  • The commitments related to intellectual property rights in TEPA are at the TRIPS level. The IPR chapter with Switzerland, where there are high standards for IPR, reflects our strong IPR regime. India’s interests in generic medicines and the concerns related to the specific aspects of patent law and international trade law involved in the process of evergreening of patents have been fully addressed.

Encouraging digital delivery of services :  

  • EFTA’s service offering includes improved accessibility through digital delivery of services, commercial presence and improved commitments and certainty for the entry and temporary stay of key personnel.

Provision for mutual recognition in professional services :

  • TEPA also includes provisions for mutual recognition agreements in professional services such as nursing, chartered accountants, architects etc.

India’s commitment towards sustainable development, inclusive growth and environmental protection :

 

  • Under TEPA, India is resolute in its commitment towards sustainable development, inclusive growth, social development and environmental protection.

To create a business friendly and investment environment for Indian exporters :

  • TEPA will empower Indian exporters to access specialized inputs and create a business friendly and investment environment. This will boost exports of manufactured goods in India and at the same time provide the service sector an opportunity to reach more markets.

To promote transparency, efficiency, simplification, harmony and consistency of business processes :

  • TEPA promotes transparency, efficiency, trade simplification, coherence and consistency of trade processes between India and the European Free Trade Association.

Providing opportunities to integrate into EU markets :

  • TEPA offers the opportunity to integrate into EU markets.
  • More than 40 percent of Switzerland’s global services exports go to the European Union.
  • Indian companies can look to Switzerland as a base to expand their market access to the EU.
  • This provides the opportunity to integrate into EU markets, particularly through Switzerland, which serves as a basis for access to EU markets.

Promoting domestic manufacturing and employment generation :

  • TEPA promotes “Make in India” and self-reliant India by encouraging domestic manufacturing in various sectors such as infrastructure, pharmaceuticals and transportation.
  • It will accelerate job creation for India’s youth workforce over the next 15 years and facilitate technology collaboration and access to leading technologies.

To facilitate collaboration and access to world leading technologies in innovation and R&D :

 

  • TEPA will accelerate the creation of a large number of direct jobs for India’s young aspiring workforce along with improved facilities for vocational and technical training over the next 15 years in India. TEPA also facilitates technology collaboration and access to world leading technologies in precision engineering, health sciences, renewable energy, innovation and R&D.

Conclusion / Path to solution :

 

  • Despite the limited benefits that India gets under this Free Trade Agreement, this Free Trade Agreement of India with these four European Union nations is very important for bilateral trade.
  • This modern and ambitious agreement marks India’s first free trade agreement (FTA) with four developed countries in Europe, providing significant economic opportunities and promoting free trade and economic integration.
  • The European Free Trade Association (EFTA) is an important regional organization that offers many possibilities for improving the global exchange of goods and services. India’s bilateral free trade agreement with the European Union (EU) and the United Kingdom (UK), a major economic unit within Europe, will prove to be a “milestone” for India’s fast-growing economy, with EFTA.
  • After the start of free trade, there will be a reduction in the prices of goods coming to India from these countries, because under this free trade agreement, these countries will reduce their import duties. There will also be a reduction in import duty on goods exported from India. For example – Swiss chocolate, watches and biscuits from Switzerland are sold more in the Indian market. In such a situation, this bilateral trade agreement will reduce their prices.
  • This will facilitate negotiation and signing of trade agreements at regional and global levels.
  • It provides access to the markets of its member countries. It facilitates trade and investment opportunities, and it implements tariff reductions and concessions to promote trade liberalization.
  • The EFTA agreement also marks the first time that India has agreed to include non-trade issues such as labour, human rights, environment and gender in an economic agreement. It is debatable whether these issues are necessary to be included in trade agreements, but it is a positive sign for potential partners like the EU that see them as so important.

Download Yojna daily current affairs eng med 14th March 2024

 

Practice Questions for Preliminary Exam :

Q.1. Consider the following statements regarding India and European Free Trade Association Trade and Economic Partnership Agreement.

  1. EFTA is an intergovernmental organization which was established in 1990.
  2. The concept of free trade is the opposite of trade protectionism or economic isolationism.
  3. The President of India has approved the signing of TEPA with the EFTA countries.
  4. EFTA countries include Switzerland, Iceland, Norway and Liechtenstein.

Which of the above statement / statements is/are correct?

(A) Only 1 and 3

(B) Only 2 and 4

(C) Only 1 and 4 

(D) Only 2 and 4

Answer –  (D) 

 

Practice Questions for Main Exam :

Q.1. Highlighting the key provisions of the India and European Free Trade Association Trade and Economic Partnership Agreement, Discuss how this Free Trade Agreement will strengthen bilateral trade and boost domestic manufacturing sector and employment generation ? Give a logical explanation.

Tags:
No Comments

Post A Comment