The agreement includes a binding commitment from EFTA countries Switzerland, Norway, Iceland and Liechtenstein to provide USD 100 billion in foreign direct investment (FDI) to India over 15 years and create 1 million jobs.
Indian Commerce Minister Piyush Goyal said at a meeting organized by the Association of Indian Chambers of Commerce and Industry (ASSOCHAM) in Mumbai that the agreement has been ratified by the four EFTA member countries and the necessary documents have been submitted to the data bank in Norway. “For the first time in the history of Free Trade Agreements, there is a legal commitment to targeted investment and job creation,” the minister stated.
Investment Target and Right of Withdrawal
According to the agreement, USD 50 billion dollars will be invested in the first 10 years and an additional USD 50 billion in the next 5 years. The Indian side will retain the right to withdraw tariff reductions if the commitment is not fulfilled. While sovereign wealth funds are exempted from FDI obligations under the agreement, indirect investments of EFTA organizations will also be included in the scope of the commitment.
New Era in Trade
The agreement provides for a reduction or exemption of 92.2% of EFTA tariffs covering 99.6% of Indian exports. EFTA's market access offers cover 100% of non-agricultural products and tariff-free access for processed agricultural products. India has committed to a reduction of 82.7% of tariffs, covering 95.3% of EFTA exports and more than 80% of imports.
However, some sectors were excluded from the agreement. While the existing duty on gold was maintained, dairy, soy, coal and sensitive agricultural products were also included in the exclusion list. India's sensitivities regarding production incentive programs in sectors such as pharmaceuticals, medical devices and processed foods were also taken into account.
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