India’s economic engagement with Europe has entered a new phase with the implementation of the India–European Free Trade Association (EFTA) Trade and Economic Partnership Agreement (TEPA). The agreement between India and the four EFTA countries—Switzerland, Norway, Iceland and Liechtenstein—came into force on 1 October 2025, after being signed in New Delhi on 10 March 2024.
The agreement is significant because it goes beyond conventional tariff reduction. It combines greater market access with an investment and employment objective. Under TEPA, EFTA countries aim to increase foreign direct investment in India by $100 billion over 15 years and facilitate the creation of one million direct jobs through these investments. The pact is also the first Indian trade agreement to include such a specific investment commitment.
What does the agreement offer?
The agreement covers 14 chapters, including trade in goods, rules of origin, customs and trade facilitation, services, investment promotion, intellectual property, government procurement, competition and sustainable development.
For Indian exporters, one of the major advantages is improved access to EFTA markets. EFTA has offered concessions covering 92.2% of tariff lines, representing 99.6% of India’s exports, while sensitive Indian sectors have received protection. The government has specifically highlighted safeguards for sectors including dairy, soya, coal and sensitive agricultural products.
The agreement could particularly benefit sectors such as pharmaceuticals, engineering, food processing, renewable energy, healthcare, financial services, education, seafood and maritime services. It also seeks to improve opportunities for Indian service professionals through provisions concerning professional mobility and recognition of qualifications.
Investment and employment at the centre
The $100-billion investment objective is arguably the most distinctive feature of TEPA. Under the agreement, EFTA states aim to facilitate $50 billion of investment during the first 10 years, followed by another $50 billion during the subsequent five years. The accompanying employment objective is one million direct jobs in India.
The potential impact extends beyond capital inflows. Increased investment could bring technology, manufacturing capabilities, specialised skills and integration with global value chains. EFTA and Indian authorities have also identified areas such as clean technologies, precision manufacturing, life sciences and digital transformation for deeper cooperation.
Challenges remain
However, the benefits of the agreement will depend on actual implementation. The $100-billion figure is an investment objective rather than an immediate transfer of funds. Indian companies will also need to meet EFTA standards, quality requirements and other regulatory conditions to fully exploit the new market access.
At the same time, greater trade liberalisation can create competitive pressures for domestic producers. India has therefore maintained exclusions and safeguards for several sensitive sectors.
Since TEPA entered into force, Indian exporters have begun using its preferential provisions. According to the Commerce Ministry, 7,885 Certificates of Origin had been issued under the agreement, indicating utilisation of tariff concessions by Indian exporters.
Overall, the India–EFTA agreement represents an important shift from a traditional free-trade arrangement towards a broader partnership involving trade, investment, employment, technology and services. Its long-term significance will ultimately depend on whether the promised investment materialises, Indian exports expand and the agreement translates into productive employment and stronger integration with European markets.
Sources: PIB , The Hindu
