The countries of the European Free Trade Association (EFTA: Iceland, Liechtenstein, Norway and Switzerland) signed a free trade agreement (FTA) with India in Delhi on 10 March 2024 after 16 years of negotiations. This is a significant milestone in Swiss trade policy and makes Switzerland and the other EFTA states the first European partner to conclude an FTA with India.
Free Trade Agreement being negociated
FTA EFTA–India – FAQ on conclusion of the negotiations
What does the EFTA–India free trade agreement (FTA) cover?
What are the advantages of the FTA for Switzerland?
Does the agreement also contain provisions on the protection and enforcement of intellectual property?
Will the FTA with India make it more difficult for the Indian population to access generic medicines?
Is now the right time to conclude an FTA with India? Given the current Indian government's democratic shortcomings or authoritarian and nationalist tendencies?
How does the FTA regulate sustainability issues?
Why did the negotiations take so long? Why was it possible to finalise them now?
Why does the FTA include a chapter on investment promotion? What does it contain?
When does the agreement enter into force?
- The FTA contains provisions on trade in industrial goods (including fish and marine products), processed and unprocessed agricultural products, technical barriers to trade, sanitary and phytosanitary measures, rules of origin, trade facilitation, trade in services, protection and enforcement of intellectual property, competition, government procurement, dispute settlement, and trade and sustainable development. The chapter on investment promotion is new territory.
- The agreement also establishes an institutionalised dialogue (Joint Committee), which is intended to facilitate future discussions with the Indian side on any problems that arise.
- The FTA will initially give the Swiss economy a significant advantage over its competitors, particularly those from the EU.
- India is granting Switzerland improved market access to trade in goods for almost 95% of current Swiss exports (other than gold) and for more than 95% of current exports of industrial products.
- This means that Swiss exporters can benefit from annual customs tariff savings of up to CHF 166 million, subject to various transition periods.
- Some examples: Swiss watches are fully exempt from customs duties. A large proportion of machinery will also enjoy zero customs duties. Around 74% of chemical products will qualify for duty exemption.
- For processed agricultural products, India will grant Switzerland tariff-free market access for selected processed agricultural products, including chocolate, coffee capsules and certain food preparations, after a transition period of up to 10 years.
- For basic agricultural products, India will eliminate customs duties for Switzerland on various fruits and vegetables and goods of plant and animal origin after transition periods of up to 10 years. For wine, India is granting Switzerland phased tariff reductions over 10 years.
- The Swiss financial and insurance sector will also benefit. For example, foreign capital will be allowed up to 49% in the insurance sector and increased from 51% to 74% in the banking sector. The agreement also increases legal certainty.
- The agreement improves the protection of ‘Swissness’ for all goods and services. The treatment of ‘Swissness’ in trademark applications is specifically regulated between India and Switzerland.
- For geographical indications, such as names for cheeses, watches, etc., the agreement provides for greater protection upon application.
- Regarding innovation protection, the agreement guarantees that patented products exported from Switzerland to India cannot be discriminated against in favour of locally manufactured products. This eliminates the legal uncertainty that has existed in India for years but without compromising the options provided for in the TRIPS Agreement in relation to compulsory licensing. India will also simplify and shorten the opposition procedure for patents and the mandatory filing of notifications in India.
- Finally, the agreement provides for border protection measures for both imports and exports for all intellectual property rights, at least on court application.
- Switzerland advocated a balanced solution throughout the negotiations. This includes not only legal certainty regarding intellectual property and promoting innovative medicines, but also access to innovative medicines for the Indian population.
- The free trade agreement does not affect the options available under the TRIPS Agreement concerning compulsory licensing. On the contrary, it reaffirms them with explicit reference to the 'Doha Declaration on the WTO TRIPS Agreement and Public Health'.
- The public health article of the free trade agreement also confirms the TRIPS provision on compulsory licensing for the export of patented medicines to countries with insufficient production capacity. Naturally, this will benefit exports of generic medicines.
- The agreement also includes simplifications that should lead to faster completion of patent granting procedures. This is in everyone's interest: generic companies also need legal certainty as quickly as possible.
- The FTA protects drug test data in accordance with the WTO's TRIPS Agreement. It does not restrict access to medicines.
- India is the world's largest democracy. Switzerland has a great interest in strengthening its relations with this country and in maintaining a bilateral dialogue. The agreement can serve as an additional instrument for dialogue, including on the issues mentioned.
- The preamble to the agreement reaffirms the international obligations of the parties, in particular those under the UN Charter and the Universal Declaration of Human Rights.
- The Joint Committee will be an important platform for discussion with India on issues such as human rights and labour rights.
- The FTA contains a comprehensive and legally binding chapter on trade and sustainable development.
- This chapter contains the central and legally binding commitment not to derogate from the existing level of protection of labour and the environment in each party for the purpose of promoting trade.
- It is also a reaffirmation of the parties' commitment to implement the international conventions they have ratified in the areas of labour, environment, climate change and non-discrimination.
- In addition, this chapter contains robust mechanisms for resolving disagreements (Sub-Committee on Sustainability Issues, consultation mechanisms).
- Over the past 16 years, there have been various pauses in negotiations, but Switzerland and EFTA have always had varying degrees of contact with India.
- India has stepped up its free trade policy in recent years and concluded a free trade agreement with the United Arab Emirates and an early harvest agreement with Australia. India has also opened negotiations with other partners, including the EU and the UK.
- This new openness on India's part, together with a strong Swiss-led initiative, had a positive impact on the process with EFTA.
- This new chapter is in response to India's call for the FTA to not only facilitate trade but also promote investment in India.
- The EFTA countries have therefore committed themselves to promoting investment in India. In this context, the agreement defines a number of promotional activities. For its part, India will endeavour to create and maintain a favourable investment climate.
- Two targets have been set as a point of reference: an increase of USD 100 billion in investment from EFTA and the associated creation of one million jobs in India over the next 15 years. These figures are based on, among other things, ambitious assumptions about future economic growth in India. Should it become clear that the underlying assumptions will not be realised, the target figures will be revised downwards.
- If the targets are not met, India may suspend concessions on trade in goods after a multi-stage consultation process and at the earliest 20 years after the agreement enters into force. After a further three years, the EFTA states may initiate consultations with a view to ending these measures by India.
- The aim is for the agreement to be debated in at least one chamber of Parliament this year.
- This would mean that – assuming there is no optional referendum and India has completed its internal procedures – the agreement would enter into force in autumn 2025.
Last modification 10.03.2024
