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India will eliminate most tariffs on industrial products from four European nations in exchange for $100 billion in investment over 15 years, according to the Commerce minister, following the signing of an economic agreement on Sunday that brought nearly 16 years of discussions to a close.
The agreement follows trade agreements with Australia and the United Arab Emirates during the last two years, and officials say another with Britain is nearing completion as Prime Minister Narendra Modi strives for $1 trillion in annual exports by 2030. According to Commerce Minister Piyush Goyal, the European Free Trade Association, which includes Switzerland, Norway, Iceland, and Liechtenstein, plans to invest $100 billion in India's fast-growing market of 1.4 billion people over the next 15 years.
"Norwegian companies exporting to India today meet high import taxes of up to 40% 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 at a press conference, "It is a modern trade agreement, fair, equitable and win-win for all five countries."
In turn, the Swiss government said in a statement that India will lift, or partially remove, very high customs duties on 95.3% of industrial imports from Switzerland, excluding gold, either immediately or over time. 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% from 40% but does not anticipate much impact on metal imports from Switzerland, 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 resulted from 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 estimated to be $25 billion in 2023, according to its trade ministry.
"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 close a large trade gap with the group, but it 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 Norwegian technologies," said trade economist Ram Singh, who heads the Indian Institute of Foreign Trade, a New Delhi think tank.
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