India-EFTA Trade Pact Kicks In, Unlocking $100 Billion Investment and 1 Million Jobs

NEW DELHI, October 3, 2025 – In a major boost to its global economic ambitions, India’s landmark Free Trade Agreement (FTA) with the European Free Trade Association (EFTA) bloc officially came into effect on Wednesday, October 1. The pact with the four-nation group—comprising Switzerland, Norway, Iceland, and Liechtenstein—is set to unlock a committed investment of USD 100 billion over the next 15 years and is projected to create one million direct jobs across the country.¹

The Trade and Economic Partnership Agreement (TEPA), finalized in March 2024, is being hailed by officials as a new-generation trade deal that prioritizes both investment and market access.² It marks another significant step in India’s strategy to integrate deeply into global value chains, complementing recent trade deals with the UAE, Australia, and the UK.

“This is a golden new chapter in India-EFTA relations,” a senior official from the Commerce Ministry stated on Friday. “This agreement is unique because it binds our partners to a substantial, long-term investment in India. It’s a powerful vote of confidence in the Indian growth story and will be a catalyst for job creation in sectors ranging from pharmaceuticals to advanced manufacturing.”

Under the terms of the agreement, India will gain 100% market access for its industrial and non-agricultural products, along with significant tariff concessions on processed agricultural goods.³ In return, the EFTA nations, known for their high-tech and high-value industries, gain access to India’s vast and growing consumer market. To streamline the promised investment, a dedicated EFTA Desk has been operational since February 2025, acting as a single-window facilitation mechanism for businesses from the bloc.⁴

A Strategic Push via Free Trade

The EFTA pact is the latest in an aggressive push by New Delhi to leverage Free Trade Agreements to expand exports and attract stable foreign direct investment (FDI).⁵ Past agreements have yielded significant results: the India-UAE Comprehensive Economic Partnership Agreement (CEPA) led to a 12% growth in Indian exports in its first year, while the India-Australia Economic Cooperation and Trade Agreement (ECTA) resulted in a 25% surge in FDI inflows.

These deals have also opened new export markets for Indian farmers, as seen with the India-Mauritius pact, and facilitated crucial technology transfer, particularly in the renewable energy sector through the Australian agreement.

Balancing Gains with Domestic Concerns

However, the path of free trade is not without its challenges, and experts caution that past FTAs have yielded mixed results that must be carefully managed.⁶ A primary concern has been the widening trade deficits, as seen in the case of the India-ASEAN FTA, which led to a surge in imports to $44 billion in FY23 without a corresponding rise in exports.

Furthermore, small farmers and Micro, Small, and Medium Enterprises (MSMEs) remain vulnerable to competition from cheaper imports, a recurring issue for sectors like rubber and spices under the ASEAN agreement. Non-tariff barriers in developed markets and the imposition of stringent labour and environmental clauses, such as the EU’s Carbon Border Adjustment Mechanism, also pose significant hurdles for Indian exporters.

To maximize gains from deals like the TEPA and mitigate risks, analysts suggest a multi-pronged strategy. “Strengthening domestic export competitiveness through a focus on quality and branding is non-negotiable,” said a trade policy expert. “Simultaneously, we must diversify our FTA partners to emerging markets in Africa and Latin America, while improving our port and logistics infrastructure to reduce costs.”

As the India-EFTA agreement moves from paper to practice, its success will be a key test of India’s ability to balance its global aspirations with the imperative of protecting its domestic industries and vulnerable sectors, setting the stage for its ongoing trade negotiations with the European Union.