EFTA deal: Cheaper good from Switzerland, three other European nations coming into India
Virendra Pandit
New Delhi: From next year, Indian customers will start getting access to high-quality Swiss products—watches, chocolates, biscuits, and clocks—at lower prices as India will phase out customs duties in the coming years under its just-concluded trade pact with the EFTA bloc on these goods.
India and the four-European nation bloc EFTA signed a trade and economic partnership agreement (TEPA) on Sunday to boost trade and investments between the two regions. The European Free Trade Association (EFTA) members are Switzerland, Norway, Iceland, and Liechtenstein.
It will take up to a year to implement the agreement because of an elaborate ratification process of these pacts in different countries, the media quoted an official as saying. “We are giving duty concessions on Swiss watches, and chocolates. Some famous Swiss watch brands are Rolex, Omega, and Cartier.
Nestle, a major Swiss brand, is a key player in the Indian FMCG industry and manufactures chocolates in India. It is the third-largest listed entity in the Indian FMCG segment.
According to the economic think tank Global Trade Research Initiative (GTRI), India has allowed tariff concession to several products imported from Switzerland under the agreement.
“India will soon have access to high-quality Swiss products at lower prices because it will remove tariffs on many Swiss goods over seven to ten years,” GTRI Founder Ajay Srivastava said.
Key categories of these goods include seafood like tuna and salmon, fruits such as olives and avocados, coffee capsules, oils like cod liver and olive oil, and a variety of sweets and processed foods including chocolate and biscuits.
Other products include smartphones, bicycle parts, medical equipment, clocks, watches, medicines, dyes, textiles, apparel, iron and steel products, and machinery equipment.
He said tariffs on cut and polished diamonds will also be reduced from 5 percent to 2.5 percent in five years after the implementation of the agreement.
India has offered no effective tariff concessions on gold. It has offered a one percent concession on the bound rate of 40 percent, but the effective duty remains at 15 percent, resulting in no real benefit.
For wines, duty concessions are similar to those given to Australia, with no concessions for wines costing less than USD 5.
“Wines priced between USD 5 and USD 15 will see a duty reduction from 150 percent to 100 percent in the first year, then decreasing gradually to 50 percent over 10 years,” Srivastava said.
For wines costing USD 15 or more, he said, the initial duty cut is from 150 percent to 75 percent, eventually reducing to 25 percent after 10 years.
The India-EFTA two-way trade came down to USD 18.65 billion in 2022-23 as compared to USD 27.23 billion in 2021-22.
Switzerland is among the world’s most innovative economies, consistently ranking number one in the Global Innovation Index. It is the largest trading partner of India among the four nations, followed by Norway.
The bilateral trade between India and Switzerland stood at USD 17.14 billion (USD 1.34 billion exports and USD 15.79 billion imports) in the last fiscal. In 2022-23, India’s trade deficit with Switzerland was USD 14.45 billion.
India’s main imports from Switzerland include gold (USD 12.6 billion), machinery (USD 409 million), pharmaceuticals (USD 309 million), coking and steam coal (USD 380 million), optical instruments and orthopedic appliances (USD 296 million), watches (USD 211.4 million), soybean oil (USD 202 million), and chocolates (USD 7 million).
Major exports from India include chemicals, gems, jewelry, boats, machinery, certain types of textiles, and apparel.
Switzerland is the largest source of gold imports for India, with about 41 percent share during April-October this fiscal, followed by the UAE (about 13 percent) and South Africa (about 10 percent). The precious metal accounts for over 5 percent of the country’s total imports.
Switzerland has some of the major pharma firms in the world, including Novartis and Roche. Both firms have a presence in India.
The two-way trade between India and Norway was USD 1.5 billion in 2022-23.
Under free trade pacts, two trading partners significantly reduce or eliminate customs duties on the maximum number of goods traded between them, besides easing norms to promote trade in services and investments.
India has received about USD 10 billion of foreign direct investments (FDI) from Switzerland between April 2000 and December 2023. It is the 12th largest investor in India.
The FDI inflow was USD 721.52 million from Norway, USD 29.26 million from Iceland, and USD 105.22 million from Liechtenstein during the period.
