India EFTA Trade Pact A 100 Billion Catalyst for Indias Next Growth Cycle

The India–EFTA Trade and Economic Partnership Agreement (TEPA) is more than a trade deal it’s a strategic redesign of India’s global investment playbook. Signed on March 10, 2024, and effective from October 1, 2025, TEPA is India’s first free trade agreement with developed European nations — the European Free Trade Association (EFTA), which includes Iceland, Liechtenstein, Norway, and Switzerland.

At the heart of the agreement lies a USD 100 billion foreign direct investment (FDI) commitment over 15 years, backed by some of the world’s most stable and innovation-led economies. This investment aims to create 1 million direct jobs in India, making TEPA the first Indian FTA with binding pledges for both capital inflows and employment creation.

Building the Framework for the Future

TEPA’s 14 chapters touch every aspect of modern trade goods, services, investment, digital economy, sustainability, and intellectual property. It reflects a comprehensive, forward-looking approach that connects India’s manufacturing push with Europe’s technology and governance strengths.

EFTA members have opened 92.2% of their tariff lines, giving India duty-free or reduced-tariff access for 99.6% of its exports. India, in turn, has offered tariff concessions on 82.7% of its lines, covering 95.3% of EFTA exports, while protecting sensitive areas like dairy, coal, and specific agricultural goods.

Importantly, India’s tariff reductions for key manufacturing sectors under the Make in India and PLI schemes will be phased in over 5–10 years, giving domestic producers enough time to strengthen their competitiveness.

Services and Skilled Mobility

TEPA stands out in the services domain an area where India has clear comparative strength. India’s commitments cover 105 service sub-sectors, while EFTA offers between 107 and 128 across its members.

The pact also covers three key market access modes:

• Mode 1: Digital delivery of services,

• Mode 3: Commercial presence, and

• Mode 4: Temporary movement of professionals.

Crucially, the agreement includes Mutual Recognition Agreements (MRAs) for regulated professions like nursing, accountancy, and architecture, easing entry for Indian professionals in European markets. This will expand India’s high-value services exports and strengthen its global workforce footprint.

Sectoral Impact Across the Economy

The TEPA pact opens new doors across sectors that power both India’s export engine and domestic employment.

• Manufacturing and Engineering: Access to advanced machinery, smart systems, and technology cooperation enhances productivity and quality.

• Agriculture and Processed Foods: Basmati rice, pulses, fruits, and processed vegetables gain new access to premium European markets.

• Marine Exports: Duty relief on shrimp and fish helps India’s coastal economies expand their trade reach.

• Textiles, Gems, and Jewellery: Traditional export leaders get renewed growth momentum under lower tariffs.

At the same time, sensitive areas like dairy, coal, and select pharmaceuticals are protected, ensuring that growth in exports doesn’t come at the cost of domestic stability.

Strategic and Investment Implications

From an investment perspective, TEPA introduces a first-of-its-kind binding FDI and employment clause a design that aligns trade liberalization with capital formation.

To ensure smooth execution, the India–EFTA Desk, operational since February 2025, functions as a single-window platform to convert investment commitments into real projects. This will help attract long-term, stable, and innovation-driven capital, as opposed to short-term speculative flows.

The Bigger Picture

TEPA signals India’s deeper integration into global value chains and its shift from being a cost-based exporter to a value-based co-creator in manufacturing, technology, and sustainability. It aligns India’s industrial policy with European precision and regulatory quality creating a model for future FTAs.

For long-term investors, TEPA is not just a trade pact it’s a structural catalyst for India’s next growth cycle. It combines the scale of India, the capital depth of EFTA, and a shared commitment to innovation and sustainability a triad that could redefine India’s global economic role over the next decade.

Source