India-EFTA Trade and Economic Partnership Agreement (TEPA)

The India-EFTA Trade and Economic Partnership Agreement, or TEPA, is a trade deal between India and four rich European countries: Switzerland, Norway, Iceland and Liechtenstein. Together these four form a group called the European Free Trade Association (EFTA). Under TEPA, both sides cut the import taxes they charge on each other's goods and open up some services. Its most special feature is a promise by EFTA countries to invest USD 100 billion in India over 15 years.

What is EFTA?

EFTA is a small trade club of European countries that are not members of the European Union (EU). It was created by the Stockholm Convention, which came into force on 3 May 1960. The seven founding members were Austria, Denmark, Norway, Portugal, Sweden, Switzerland and the United Kingdom. Iceland joined in 1970, Finland in 1986 and Liechtenstein in 1991.

Over time, most members left to join the EU. Today only four members remain: Iceland, Liechtenstein, Norway and Switzerland. The EFTA Secretariat (its main office) is in Geneva, with offices in Brussels and Luxembourg.

Why did India want this deal?

EFTA countries are small in population but very rich. They are strong in high-value areas such as medicines, precision machines, watches, banking, insurance, shipping and clean energy. India wanted three things from them:

• Investment that builds factories and creates jobs in India.
• Technology in areas like engineering, health and green energy.
• Market access for Indian goods and services in rich European markets.

For EFTA, India is a huge and fast-growing market of over 140 crore people.

Where did it come from?

Talks began in 2008. They took 16 years and 21 rounds. One big reason for the delay was intellectual property rights (IPR), which means legal ownership of ideas, such as medicine patents. EFTA wanted stricter protection for medicines, while India wanted to protect its generic medicine industry (cheap copies of medicines whose patents have ended). The deal was finally signed on 10 March 2024 in New Delhi. It came into force on 1 October 2025.

What does the deal cut on goods?

Think of tariffs as an "entry fee" charged at the border on imported goods. TEPA lowers or removes this fee.

• EFTA's offer: EFTA gives concessions on 92.2% of its tariff lines (a tariff line is one product category in the customs list). These cover about 99.6% of India's exports to EFTA. This includes 100% of non-farm products.
• India's offer: India gives concessions on 82.7% of its tariff lines, covering 95.3% of EFTA's exports to India.
• Gold is kept out in practice. Gold is the biggest thing India buys from Switzerland. India did not make any effective cut in its duty on gold.
• Sensitive sectors are protected. India kept products like dairy, soya, coal and many farm goods outside its tariff cuts, to protect Indian farmers and small producers.

What does it say about services?

Services are things you sell that are not physical goods, like IT work, banking, nursing or accounting. India made commitments in 105 sub-sectors. EFTA countries made commitments in more: Switzerland in 128, Norway in 114, Iceland in 110 and Liechtenstein in 107. The deal also opens the door to agreements for recognising each other's professional degrees (called Mutual Recognition Agreements) in fields like nursing, accountancy and architecture.

The investment promise: what makes TEPA unique

This is the first time a trade deal signed by India has a legal chapter with a numbered investment target. It works like this:

• EFTA countries aim to raise foreign direct investment (FDI) into India by USD 50 billion in the first 10 years after the deal starts, and another USD 50 billion in the next 5 years. That is USD 100 billion over 15 years.
• The goal is to help create one million direct jobs in India.
• Only FDI counts. Foreign portfolio investment (buying shares and bonds for short-term returns) does not count.

What if the investment does not come?

The deal has a step-by-step safety process. If the target is not met after 15 years, India can ask for consultations. These can last up to a year inside an Investment Sub-Committee, and then up to six months more in the TEPA Joint Committee. EFTA can then get a grace period of three years. Only after all this can India take "temporary and proportionate" steps to rebalance, meaning it can take back some of the tariff cuts it gave. So in practice India cannot act on this for around 18 years.

Other chapters of the deal

TEPA has 14 chapters. Besides goods, services and investment, they cover:

• Rules of origin: rules that decide which country a product "comes from", so goods from a third country cannot sneak in through an EFTA country to get the low tariff.
• Customs and trade facilitation: making border paperwork faster.
• Sanitary and phytosanitary measures: food safety and plant and animal health rules.
• Technical barriers to trade: product standards and testing.
• Intellectual property rights, government procurement, competition and dispute settlement.
• Trade and sustainable development: commitments on the environment and workers' rights. This is the first time India accepted such a chapter in a trade deal.

How is it being put into practice?

On 10 February 2025, Invest India (India's national investment promotion agency) launched a special EFTA Desk. It helps companies from EFTA countries set up business in India. An India-EFTA Prosperity Summit also brings governments and businesses together. The first was held in New Delhi on 1 October 2025, the day TEPA came into force. The second was set for 7 October 2026 in New Delhi, to mark one year of the deal.

India and the EFTA countries also agreed on an investment facilitation mechanism: a joint system to track whether the promised investment and jobs are actually arriving.

India's position and Indian examples

TEPA is one of India's new-generation trade deals with developed countries, after the India-Mauritius CECPA (2021), the India-UAE CEPA (2022) and the India-Australia ECTA (2022). It is India's first such deal with a group of developed European countries. India sees it as a model for linking market access to real investment and jobs.

Commonly confused concepts

• EFTA vs European Union (EU): EFTA is a free trade area of four countries with no common outside tariff. The EU is a much deeper union of 27 countries with a common outside tariff (a customs union), a single market and, for many members, a common currency. EFTA countries are not EU members.
• EFTA vs European Economic Area (EEA): The EEA joins the EU's single market with three EFTA countries: Iceland, Liechtenstein and Norway. Switzerland is in EFTA but not in the EEA. Swiss voters rejected the EEA in a referendum in 1992, so Switzerland deals with the EU through separate bilateral agreements.
• TEPA vs FTA vs CEPA: All are trade agreements. "TEPA" is simply the name chosen for this deal. Its special feature is the legally written investment target, which ordinary FTAs and CEPAs do not have.
• TEPA vs a Bilateral Investment Treaty (BIT): A BIT protects investors' rights after they invest. TEPA's investment chapter is mainly about promoting and growing investment, with a target.

Issues, criticism and the way forward

• Smaller gains on goods than they look: Switzerland removed import duties on all industrial goods for every country from 1 January 2024. So Indian factory goods would have entered Switzerland duty-free even without TEPA. This reduces the extra benefit for Indian exporters.
• Trade deficit: India buys much more from EFTA than it sells, mostly because of gold imports from Switzerland. Cutting tariffs on other EFTA goods could widen this gap.
• Investment is a "best effort" goal: The target is written in the agreement, but India's remedy comes only after about 18 years. Critics say this is a weak lever. Supporters say the target still gives a strong political and legal signal.
• Non-tariff barriers: Strict European standards on food safety, chemicals and medicines can block Indian goods even when tariffs are zero. This is why India is asking for better market access for marine and farm products.
• Way forward: Experts suggest regular reviews of the deal, faster recognition of Indian professional degrees, help for small Indian exporters to meet European standards, and close tracking of EFTA investment year by year.

Concepts to Know

• Tariff: A tax charged on goods when they are imported into a country. It makes foreign goods costlier.
• Tariff line: One product category in a country's customs list, such as "fresh grapes" or "wrist watches". Countries count their tariff cuts by these lines.
• Foreign Direct Investment (FDI): Money a foreign company puts into a business in another country to own and run it for the long term, like building a factory.
• Foreign Portfolio Investment (FPI): Money a foreigner puts into shares or bonds, usually for shorter-term profit, without running the business.
• Trade deficit: When a country buys (imports) more from another country than it sells (exports) to it.
• Non-tariff barrier: Any rule other than a tax that makes trade harder, such as strict quality standards, testing or licences.
• Generic medicine: A cheaper copy of a branded medicine, made once its patent protection ends. India is a world leader in making them.