"Low preference utilisation has limited the benefits of India's FTAs." Discuss the reasons and suggest institutional measures, including the role of States.

Preference utilisation is the share of eligible exports that actually claim the lower tariff rate under a free trade agreement (FTA). It decides whether tariff cuts on paper become export gains. The India–EFTA TEPA came into force on 1 October 2025. One year later, the Commerce Secretary said the main gap now lies in utilisation, not market access [1].

Reasons for low utilisation

• Cost of rules of origin: to get the FTA rate, an exporter must prove the goods "originate" in India [2]. This needs certificates and records of where inputs came from. For a small exporter, the duty saved often does not cover the paperwork.
• Thin preference margins: Switzerland removed duties on all industrial goods from 1 January 2024, for every country [3]. So much of EFTA's offer (92.2% of tariff lines, covering 99.6% of India's exports [1]) gives Indian goods no price edge. A low headline utilisation figure may reflect zero margins, not exporter failure.
• Non-tariff barriers: SPS (food safety) and TBT (product standards) rules decide whether goods can enter at all, whatever the tariff [2]. The Secretary also pointed to quality standards and non-tariff issues [1].
• Gains sit with the smallest exporters: real tariff gains lie in farm goods, such as zero duty on all coffee lines. Yet India's farm exports to EFTA were only USD 72.37 mn in FY25 [2]. These dispersed exporters are the least aware of FTA benefits.
• Data blind spot: monitoring tracks trade growth (exports to FTA partners rose 36.3% in Q1 FY27 [4]), not whether exporters actually claimed the FTA rate.

Institutional measures

• Utilisation dashboard: the Department of Commerce should publish product-wise data on preference use for each partner, building on NITI Aayog's Trade Watch [4].
• Cheaper origin compliance: digital certificates of origin and self-certification by trusted exporters. Switzerland's own reform likewise cut administrative costs [3].
• 5-year action plan for each market, prepared by Export Promotion Councils and industry bodies around non-tariff issues [1], along with regulatory cooperation under the agreement's SPS/TBT chapters [2].

Role of States

• The Secretary asked State Governments to take FTA awareness to businesses "in every part of the country" [1]. This is cooperative federalism in trade policy.
• States should build FTA preference mapping into their own export strategies and district plans.
• State agriculture and food-processing departments can set up testing and certification support so that tea, coffee and processed food meet EFTA standards [2].

In short, FTAs pay off only when preferences are claimed and standards are met. India's focus should move from negotiating access to making sure exporters use it, with the Centre, EPCs and States working together. Together with the tariff predictability that treaties provide [1], this can turn TEPA into lasting export gains, in line with Atmanirbhar Bharat and SDG 17 (partnerships for trade).