New Delhi: India will lift most import tariffs on industrial products from four European countries in return for investment of $100 billion over 15 years, Minister of Commerce and Industry Piyush Goyal said, after an economic pact signed on Sunday that concluded nearly 16 years of negotiations.
The deal follows trade pacts over the last two years with Australia and the United Arab Emirates, while officials say another, with Britain, is in its final stages, as Prime Minister Narendra Modi aims for annual exports of $1 trillion by 2030.
It envisages that the European Free Trade Association, comprised of Switzerland, Norway, Iceland and Liechtenstein, will invest $100 billion over 15 years in India's fast-growing market of 1.4 billion people, Goyal said.
In turn, India will lift, or partially remove, very high customs duties on 95.3 per cent of industrial imports from Switzerland, excluding gold, either immediately or over time, the Swiss government said in a statement.
"Norwegian companies exporting to India today meet high import taxes of up to 40 per cent on certain goods," Industry Minister Jan Christian Vestre said in a separate statement. "With the new deal, we have secured nil import taxes on nearly every Norwegian good."
The pact covers some new elements such as intellectual rights and gender equity, Goyal added, telling a press conference, "It is a modern trade agreement, fair, equitable and win-win for all five countries." The five signatories must ratify Sunday's deal before it can take effect, with Switzerland planning to do so by 2025.
The news comes ahead of general elections due by May at which Modi will seek a record third term. India has committed to cut its ‘bound tariff rate' on gold to 39 per cent from 40 per cent, but does not anticipate much impact on imports of the metal from Switzerland, which were estimated at $16 billion last fiscal year, an Indian government official said.
The Indian market offers immense opportunities for trade and investment, said Swiss economic official Guy Parmelin, adding that the pact was the result of 21 rounds of talks.
India is the EFTA grouping's fifth-largest trading partner after the European Union, the United States, Britain and China, with total two-way trade of $25 billion in 2023, its trade ministry estimates.
"The agreement contains a comprehensive and legally binding chapter on trade and sustainable development," the Swiss government said.
"This will enable the EFTA states, in particular, to address trade-related sustainability considerations." Analysts said the pact may not immediately help India to cut a large trade gap with the group but will help draw investment into key industries.
"The trade agreement will help attract investment in critical sectors like medical devices and clean energy, and expand exports to other countries by accessing Swiss and Norway technologies," said trade economist Ram Singh, who heads a New Delhi thinktank, the Indian Institute of Foreign Trade.