The India–EFTA TEPA marks a shift from tariff-centric to investment-linked FTAs. Examine its significance for India's trade strategy.

The India–EFTA Trade and Economic Partnership Agreement (TEPA) came into force on 1 October 2025 [3]. It is India's first FTA with any European economic bloc [1]. Older Indian FTAs were mostly about cutting tariffs. TEPA adds a USD 100 billion FDI target and one million direct jobs over 15 years [2], which makes trade deals a tool for building industry.

The shift: what is new

• Investment chapter: EFTA states "shall aim to" raise FDI by USD 50 bn in 10 years and USD 50 bn in the next five. Portfolio investment (FPI) is excluded, so only long-term, job-creating capital counts [2].
• Asymmetric access: EFTA opened 92.2% of tariff lines, covering 99.6% of India's exports. India opened 82.7%, covering 95.3% of EFTA's exports [2].
• Services and mobility: Switzerland opened 128 services sub-sectors to India. Mutual Recognition Agreements (MRAs) are planned for nursing, chartered accountancy and architecture [2].

Significance for India's trade strategy

• FTA as an FDI magnet: the deal links trade policy to Make in India. Tariff cuts on PLI products are phased over 5–10 years [2].
• Calibrated protection: dairy, soya and coal are excluded. The IPR chapter stays at TRIPS level, which protects India's role in generic medicines [2].
• Resilient supply chains: both sides aim for "trusted supply chains" and better access for Indian pharma, textiles and engineering goods [1].
• Strategic spillover: in October 2026 the two countries signed an infrastructure agreement and a mobility agreement. They also agreed to cooperate on defence production and nuclear energy [1].
• Benchmark: TEPA is a model for negotiations with other developed economies, such as the EU.

Limitations

• Target, not obligation: governments cannot direct private capital. Swiss FDI into India was only USD 10.87 bn over 2000–2025 [4], so the pace needs to rise sharply.
• Tax friction: in AO v. Nestle SA (2023), the Supreme Court held that the MFN benefit under the India–Switzerland tax treaty needs a Section 90 notification [5][6]. This leaves Swiss investors unsure what tax rate they will pay on dividends.
• Mobility gap: until MRAs are signed, Indian professionals may not be able to practise in EFTA countries.

TEPA changes the question India asks of its FTAs, from how much tariff to cut to how much capacity to build. For it to work, India needs public yearly FDI tracking, a tax-treaty protocol that settles the MFN question, and quick MRAs. If these are done, TEPA can become the model for India's new-generation FTAs and advance SDG 8 (decent work and economic growth).