Switzerland’s decision to end import duties would limit gains

New Delhi: Large trade deficit with Switzerland and its decision to remove import duties on almost all industrial goods for all countries starting January 1 would limit gains for India under the proposed trade agreement with EFTA bloc, a report said on Monday.

The report by economic think tank GTRI said the trade agreement in the current format will not help Indian exports and will result in higher imports and wider trade deficit. India and the European Free Trade Association (EFTA) are negotiating a free trade agreement, officially dubbed as Trade and Economic Partnership Agreement (TEPA) with a view to boosting economic ties. FTA (free trade agreement) negotiations were initiated in January 2008. EFTA members are Iceland, Liechtenstein, Norway, and Switzerland. "The Indian side faces challenges in achieving a balanced outcome in the agreement with EFTA. There are concerns due to the large trade deficit in favour of EFTA, Switzerland's new policy of allowing tariff-free entry for all industrial goods from any country, and limited gains for India in services," the Global Trade Research Initiative (GTRI) said. It added that these factors raise questions about the fair distribution of benefits to India from the FTA with EFTA.

The report added that India must navigate these negotiations with a focus on balancing trade, protecting domestic interests, and securing a fair and beneficial agreement. Switzerland's decision to eliminate import duties on all industrial goods for all countries starting January 1, 2024 changes the dynamics of the negotiations. This tariff removal does not extend to fishery and agricultural products. "This decision by Switzerland has profound implications for India's gains from the ongoing India-EFTA free trade agreement," GTRI Co-Founder Ajay Srivastava said.