Small, high-income states such as Liechtenstein and Switzerland can be important partners for India's manufacturing ambitions. Discuss in the context of TEPA.

The India–EFTA Trade and Economic Partnership Agreement (TEPA) came into force on 1 October 2025. It is India's first FTA with four developed European nations [1]. Switzerland and Liechtenstein have small markets but a lot of capital and technology. TEPA's value to India therefore lies in investment for manufacturing more than in trade volume.

Why such states matter for Indian manufacturing

• Investment-linked FTA: EFTA States "shall aim" to raise FDI by USD 100 bn over 15 years (50 bn in 10 years, then 50 bn in the next 5). Portfolio money (FPI) does not count [2]. The deal also aims at 1 million direct jobs [1]. This means long-term capital for factories, not short-term money.
• Precision technology: Hilti, Liechtenstein's largest company in India, employs over 1,500 people here [3]. Such firms bring engineering know-how and can bring Indian suppliers into global value chains.
• Sector fit: The India–EFTA Desk focuses on renewable energy, life sciences, engineering and digital transformation [4]. These sectors match Make in India and PLI priorities.
• Market access: EFTA has opened 92.2% of tariff lines, covering 99.6% of India's exports [1].
• Protection kept: India kept dairy, soya and coal off the table and left the effective duty on gold unchanged [5]. India got investment without exposing sensitive sectors.

Limitations

• Scale gap: Swiss FDI totalled USD 10.87 bn over April 2000–June 2025 [6], under USD 0.5 bn a year. TEPA needs about USD 5 bn a year. Liechtenstein's total FDI is only USD 105.82 mn [3].
• Soft obligation: The minister calls the commitment binding and points to a clawback (safeguard) clause [7]. But "shall aim" binds governments to try, not to deliver, and they cannot order private firms to invest. How the clawback would be triggered has not been made public.
• Small trade: India–Liechtenstein trade was just USD 3.37 mn in 2025 [3].
• Distant test: The first USD 50 bn milestone falls only in 2035. It will also be hard to tell investment caused by TEPA from investment that would have come anyway.

Way forward

• DPIIT should publish a yearly report of EFTA FDI measured against the Article 7.1 path.
• The rules for the clawback should be set out early, while relations are good.
• EFTA firms should be linked to MSMEs through PLI clusters, with a focus on technology rather than headline dollar figures.

Small European states can bring capital, technology and supply-chain links, all of which India's manufacturing needs. If TEPA is implemented with transparent tracking and enforceable safeguards, it can become a model for investment-linked FTAs. That would advance Atmanirbhar Bharat and SDG 9 (industry, innovation and infrastructure).