European Free Trade Association

Also called: EFTA · Topic: International Trade Policy, WTO and Intellectual Property · NCERT: Beyond NCERT

Meaning

The European Free Trade Association (EFTA) is a group of four European countries that are not in the European Union (EU): Iceland, Liechtenstein, Norway and Switzerland. It is a trading bloc, which means a group of countries that cut trade barriers among themselves. Members trade freely with each other. Each member still keeps its own tariffs (import taxes) on goods from outside countries. EFTA also signs free trade agreements (FTAs) with other countries as a group. These are deals that remove tariffs on most of the trade between the partners. For India, EFTA matters because it is a way into rich European markets and investment outside the EU.

Example

India and the four EFTA States signed the India–EFTA Trade and Economic Partnership Agreement (TEPA) in New Delhi on 10 March 2024. It came into force on 1 October 2025. EFTA States aim to raise their foreign direct investment (FDI) into India by US$100 bn over 15 years and help create 1 million direct jobs. This was the first investment pledge of its kind in an Indian FTA. It is an "aim", not a guaranteed inflow.

Don't confuse with

• European Union (EU): The EU is a customs union and more. Its members use a common external tariff, meaning the same tariff on imports from outside. EFTA members set their own outside tariffs, and none of them is an EU member.
• India–EU FTA: This is a separate deal from TEPA. It was concluded on 27 January 2026.

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• International Trade Policy, WTO and Intellectual Property