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Economy
Mahesh

10/03/24 09:41 AM IST

India to sign trade agreement with EFTA

In News
  • India is all set to sign a trade agreement with the four nation European Free Trade Association (EFTA), an intergovernmental grouping of Iceland, Liechtenstein, Norway and Switzerland.
India-EFTA
  • India runs a trade deficit with most of its top trade partners, except for the US.
  • This is also true in case of FTAs that India has signed in the past, especially with Asean nations.
  • While the Asean FTA did help India secure intermediate products, India’s increasing average tariffs (18 per cent) has meant that India’s FTA partners end up having better access to the Indian market after tariff elimination.
  • Average tariffs in developed nations hover around 5 per cent.
  • The India-EFTA deal is also expected to widen the trade gap.
  • Even as the legality of the $100 billion investment commitment by EFTA remains unclear, such investment could help India generate economic activity and jobs in exchange for giving market access to EFTA.
Benefits
  • The funds from the EFTA region include Norway’s $1.6 trillion sovereign wealth fund, the world’s largest such ‘pension’ fund, which posted a record profit of $213 billion in 2023 on the back of strong returns on its investments in technology stocks.
  • EFTA is also looking at joint ventures (JVs) in the above-mentioned sectors that will help India diversity imports away from China.
  • Currently, India’s imports of chemical products from China in FY23 alone stood at a massive $20.08 billion.
  • It imported $3.4 billion worth of medical and bulk drugs worth nearly $7 billion from China, as per commerce and industry ministry data
Source- Indian Express

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