India–EFTA TEPA: One Plus One Equals Three

Context

The India–European Free Trade Association (EFTA) Trade and Economic Partnership Agreement (TEPA) came into force on October 1, 2025. EFTA has four members — Iceland, Liechtenstein, Norway and Switzerland. These countries are European but are not members of the European Union.

The agreement is important because it is not limited to trade. India gets greater access to EFTA markets, while EFTA countries can bring investment, technology and specialised knowledge to India. This is why the idea of “one plus one equals three” is used to describe the possible benefits of the partnership.

Main Features of TEPA

Investment Commitment

• One of the important features of TEPA is the investment commitment. EFTA countries have committed to work towards $100 billion of investment in India over 15 years. This is expected to help create around 1 million direct jobs.
• The investment component makes the agreement broader than a simple tariff-cutting arrangement.

Tariff Concessions

• TEPA provides tariff concessions from both sides.
• EFTA has offered concessions on 92.2% of its tariff lines, covering about 99.6% of India’s exports. India has offered concessions on 82.7% of its tariff lines, covering around 95.3% of EFTA exports.
• India will get better access to EFTA markets for industrial and other non-agricultural products. However, India has kept some sensitive sectors outside tariff concessions. These include dairy, soy, coal and certain agricultural products.

Services and Skilled Workers

• The agreement also deals with services and digital trade. It can create more opportunities for Indian professionals working in EFTA countries.
• Mutual Recognition Agreements can help professionals such as nurses, architects and accountants get their qualifications recognised. This is useful for India because it has a large pool of skilled workers.

Meaning of “One Plus One Equals Three”

Trade and Investment

• The benefit of TEPA comes from combining trade with investment. Indian businesses can get access to EFTA markets, while investment from EFTA countries can support production and technology in India.
• If investment leads to new factories, better technology and more employment, the benefits of the agreement can extend beyond trade figures.

Technology and Expertise

• The four EFTA countries also have experience in different fields. Switzerland has strengths in precision engineering and pharmaceuticals. Norway has experience in energy and maritime activities. Iceland has expertise in geothermal energy and Arctic research.
• India can use such cooperation to develop new technologies and strengthen sectors such as clean energy and advanced manufacturing.

Challenges

• Trade Deficit: India has traditionally had a trade deficit with EFTA countries. Gold imports from Switzerland have contributed significantly to this imbalance. Therefore, increasing Indian exports will remain important.
• Intellectual Property Rights: Intellectual property rights are another area that requires attention. India has a large generic pharmaceutical industry that supplies affordable medicines. The agreement should therefore maintain a balance between protecting intellectual property and keeping medicines accessible.
• Problems for MSMEs: Indian MSMEs may find it difficult to meet European standards, certification requirements and rules of origin. Therefore, lower tariffs alone may not automatically result in higher exports.

Way Forward

• India needs to help its businesses make full use of TEPA. The India–EFTA Desk can assist companies in understanding the agreement and dealing with investment-related matters.
• More support should be given to MSMEs through better access to finance, technology, testing facilities and certification. India should also encourage cooperation in areas such as renewable energy, precision engineering and life sciences.

Conclusion

India–EFTA TEPA provides opportunities in trade, investment, employment and technology. India’s large market and skilled workforce can work together with EFTA’s capital and specialised expertise. However, the final benefits will depend on how effectively Indian businesses use the opportunities created by the agreement.

This combined effect is what is meant by “one plus one equals three.”

Source: The Hindu

UPSC Practice Question 

(Q) How can the India–EFTA TEPA boost India’s trade, investment and employment? Discuss the key challenges.

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