Commerce Secretary Shri Rajesh Agrawal Calls for Greater Utilisation of India-EFTA TEPA Opportunities

1. At a Glance

• The India–EFTA Trade and Economic Partnership Agreement (TEPA) is India's first FTA with four developed European nations: Switzerland, Norway, Iceland and Liechtenstein [2].
• It is the first Indian FTA with a treaty commitment on investment and job creation: USD 100 bn FDI and 1 million jobs over 15 years [2].
• On 7 Oct 2026, one year after entry into force, the Commerce Secretary said the gap is now in utilisation (exporters actually using the preferences). Getting the benefits to exporters is a recurring problem in Indian FTAs [1].
• Relevant to GS-II (bilateral/regional agreements affecting India) and GS-III (external sector, FDI, export competitiveness).

2. Why in the News

• 7 Oct 2026: Commerce Secretary Rajesh Agrawal gave the keynote at the Outreach Event for Major Exporters in New Delhi, held as part of the 2nd India-EFTA Prosperity Summit 2026 and organised by the Department of Commerce [1].
• Leaders from all four EFTA States came to New Delhi to mark the first year of the Agreement [1].
• He asked Export Promotion Councils, industry associations and State Governments to prepare a 5-year action plan for each partner country and market, covering how India grows in each market and which non-tariff issues need fixing [1].

3. Background & Evolution

• EFTA: set up in 1960 by its then 7 Member States to promote free trade and economic integration among its members. It is one of three economic blocs in Europe; the other two are the EU and the UK [2].
• Milestones:
• 10 Mar 2024: TEPA signed in New Delhi [2].
• Feb 2025: India–EFTA Desk began operating as a single-window investment facilitation platform [2].
• 1 Oct 2025: TEPA entered into force [1][2][3].

• 7 Oct 2026: first-anniversary outreach at the 2nd India-EFTA Prosperity Summit [1].

• Rationale: PIB presents it as a meeting point between India's Atmanirbhar Bharat goal and EFTA's search for resilient, diversified partnerships [2].

4. Core Static Facts

Item	Fact
Parties	India and EFTA (Iceland, Liechtenstein, Norway, Switzerland) [1][2]
Nodal body (India)	Department of Commerce, Ministry of Commerce & Industry [1]
Signed / in force	10 Mar 2024, New Delhi / 1 Oct 2025 [2]
Structure	14 chapters: goods market access, rules of origin, trade facilitation, trade remedies, SPS, TBT, investment promotion, services, IPR, trade and sustainable development, legal/horizontal provisions [2]
EFTA's tariff offer	92.2% of tariff lines, covering 99.6% of India's exports; all non-agricultural products and processed agricultural products covered [1][2]
India's tariff offer	82.7% of tariff lines, covering 95.3% of EFTA's exports [1][2]
Gold	Over 80% of imports from EFTA are gold; no change in effective duty [2]
Exclusion list (India)	Dairy, soya, coal, pharmaceuticals, medical devices, select food products [2]
Phased cuts	Make in India and PLI products: tariff cuts phased over 5–10 years [2]
Investment clause	Article 7.1: EFTA States "shall aim to" raise FDI by USD 50 bn within 10 years plus USD 50 bn in the next 5 years, and "facilitate" 1 million jobs within 15 years [1][2]
Services	India committed 105 sub-sectors. EFTA: Switzerland 128, Norway 114, Iceland 110, Liechtenstein 107 [2]
Modes	Mode 1 (digital delivery), Mode 3 (commercial presence), Mode 4 (temporary entry of professionals) [2]
MRAs	Nursing, chartered accountancy, architecture [2]
IPR	Reaffirms TRIPS; keeps India's public-health flexibility and safeguards against patent evergreening [2]
EFTA import market	Over USD 0.5 trillion a year in goods and services [1]

5. Multi-Dimensional Analysis

Economic

• Investment-led FTA model: FDI aimed at manufacturing, innovation and research, not portfolio flows [2]. The India–EFTA Desk focuses on renewable energy, life sciences, engineering and digital transformation [2].
• The Commerce Secretary named tariff predictability as the agreement's main value to business, because stable tariffs support long-term investment and supply-chain planning [1].
• Agriculture opening: India's agri exports to EFTA were only USD 72.37 mn in FY 2024–25. Switzerland and Norway account for over 99% of India's agri trade with EFTA [2]. Zero duty on all coffee lines [2].
• Defensive design: gold (over 80% of imports) gets no effective duty change, and PLI sectors get phased cuts, which limits the risk of a wider trade deficit [2].

Geopolitical / Strategic

• Gives India a foothold in Europe outside the EU, alongside the separate EU and UK tracks [2].
• Switzerland is a global innovation hub, and the IPR chapter is presented as a sign of confidence in India's regulatory framework [2].

Legal / Governance

• The "binding" commitment is worded "shall aim to" [1]. It is an aspirational best-endeavour pledge, not an enforceable FDI guarantee. This is useful for critical Mains answers.
• The IPR chapter reaffirms TRIPS while keeping generics and public-health flexibility, which matters for India as the "pharmacy of the world" [2].

Social / Employment

• Target of 1 million jobs in India [1]. Professional mobility opens through MRAs in nursing, accountancy and architecture [2].
• Services make up over 55% of India's GVA, so services commitments matter for jobs [2].

Administrative / Federal

• Utilisation gap: the Secretary asked EPCs, industry bodies and State Governments to take FTA awareness to businesses "in every part of the country" [1]. This is an example of cooperative federalism in trade policy.
• Market-wise action plans should target non-tariff issues [1]. NTBs (standards, SPS) in high-income markets are a quality challenge: "If you are able to create quality products in this market, then you are ready for any other market" [1].

Environmental / Sustainability

• A dedicated chapter on trade and sustainable development covers inclusive growth, social progress and environmental protection [2].

6. Recent Developments (last 12–18 months)

• Feb 2025: India–EFTA Desk operational [2].
• 1 Oct 2025: TEPA enters into force [2][3].
• 11 Oct 2025: PIB backgrounder notes tea export realisation rose to USD 6.77/kg in 2024–25, up from USD 5.93/kg the year before [2].
• 7 Oct 2026: 2nd India-EFTA Prosperity Summit 2026. The Commerce Secretary called for 5-year market-wise action plans and value-chain partnerships "from inputs to final products" [1].

7. Prelims Hooks

• EFTA members: Iceland, Liechtenstein, Norway, Switzerland. None of them is an EU member [1][2].
• EFTA was founded in 1960 by 7 original member states [2].
• TEPA was signed on 10 March 2024 in New Delhi [2].
• TEPA entered into force on 1 October 2025 [1].
• TEPA has 14 chapters [2].
• It is the first Indian FTA with an investment and job-creation commitment [2].
• Investment commitment is in Article 7.1: USD 50 bn in 10 years plus USD 50 bn in the next 5 years, for USD 100 bn over 15 years [1][2].
• Jobs target: 1 million jobs in India within 15 years [1].
• EFTA offer: 92.2% of tariff lines, covering 99.6% of India's exports [1].
• India's offer: 82.7% of tariff lines, covering 95.3% of EFTA's exports [1].
• Over 80% of India's imports from EFTA are gold, with no change in effective duty [2].
• Excluded by India: dairy, soya, coal, pharma, medical devices [2].
• India–EFTA Desk: single-window investment facilitation, operational since Feb 2025 [2].
• Services sub-sectors committed: India 105; Switzerland is highest among EFTA at 128 [2].
• MRAs cover nursing, chartered accountancy, architecture [2].

8. Why '99.6% of Our Exports Covered' Gives Less New Access Than It Sounds

• Switzerland had already removed tariffs on industrial goods before TEPA came into force
• In January 2024, Switzerland removed import tariffs on all industrial products by its own choice, for every country [4].
• Farm and fish products were left out of this cut [4].

• TEPA came into force later, on 1 Oct 2025 [2]. So in the Swiss market, an Indian machine part or garment pays the same zero duty as one from China or Vietnam.

• A 'preference margin' is what actually gives an exporter an edge

• Preference margin means the gap between the normal tariff (the MFN rate, the rate every WTO member pays) and the lower FTA rate.
• Where the MFN rate is already zero, the margin is zero. The FTA gives no price advantage there.

• So the 92.2% of lines and 99.6% of exports covered by EFTA's offer [1] count a lot of goods that were already duty-free in Switzerland.

• The real tariff gains are where EFTA still protects: farm and processed food

• That is where TEPA gives something new, for example zero duty on all coffee lines [2].

• But India's farm exports to EFTA were only USD 72.37 mn in FY 2024–25 [2]. The sectors with the most to gain are the smallest ones today.

• This is why the Secretary talked about 'tariff predictability' and not 'tariff cuts'

• Switzerland's zero tariff came from a change in its own law [4], and a later law could undo it.
• TEPA writes the zero rate into a treaty. That certainty, not a lower rate, is the main gain for industrial exporters [1].

9. Why Exporters Leave FTA Benefits Unused

• The benefit is not automatic. The exporter has to claim it.
• To get the FTA rate, an exporter must prove the goods 'originate' in India under the rules of origin chapter [2]. Rules of origin are the conditions on how much of the product must be made in India.
• That means certificates, records of where inputs came from, and the risk of audits.

• When the duty saved is small, a small firm decides the paperwork is not worth it and ships at the normal rate.

• A low 'utilisation rate' does not always mean exporters are failing

• Utilisation rate is the share of eligible exports that actually claim the FTA rate.
• For Swiss industrial goods there is nothing to claim, because the MFN rate is already zero [4].

• So a low headline utilisation figure for EFTA could just reflect zero margins, not unaware exporters. Aspirants should read such numbers sector by sector.

• The real barrier is standards, not tariffs

• The Secretary himself pointed to non-tariff issues and quality standards in these high-income markets [1].
• SPS rules (food safety and plant/animal health rules) and TBT rules (technical product standards) decide whether Indian tea, coffee or processed food can enter at all, whatever the tariff [2].
• This explains the call for 5-year market-wise action plans built around non-tariff issues [1].

10. Is the USD 100 Billion Pledge Real? The Case Against, and an Honest Answer

• The strongest objection: nobody can be made to invest
• Article 7.1 says EFTA States 'shall aim to' raise FDI and 'facilitate' jobs [1][2].
• Most FDI comes from private companies. A government cannot order a Swiss or Norwegian firm to build a factory in India.

• So critics say the headline 'binding' pledge [2] is really a target with no penalty if it is missed.

• What the objection gets right

• The wording is a best-effort promise (a promise to try), not a guarantee. Mains answers should say this plainly.

• The target is also back-loaded: USD 50 bn over the first 10 years, then another USD 50 bn in just 5 years [2]. Weak early years are allowed, so failure will only show late.

• What it misses

• No earlier Indian FTA had any investment or jobs figure in the treaty text [2]. A written target gives India a number to point to in future reviews and talks.

• Delivery support exists: the India–EFTA Desk works as a single-window for investors in chosen sectors [2].

• How to judge it fairly

• USD 50 bn in 10 years works out to about USD 5 bn a year on average [2].
• Track actual FDI from EFTA States each year against that pace. Do not judge it by the 15-year headline.

11. Who Should Fix the Gap, and How

• Department of Commerce: publish how much of the preference is actually used, partner by partner
• NITI Aayog's quarterly Trade Watch already tracks India's trade with FTA partners [5]. In Q1 FY27, exports to FTA partners rose 36.3% [5].

• Growth in trade does not show whether exporters claimed the FTA rate. Adding data on use of the preference, split by product, would show where the margin is real and still unused.

• Export Promotion Councils and State Governments: aim outreach at sectors with a real margin

• Following the Secretary's call for 5-year market plans [1], outreach should focus on farm, processed food and coffee exporters, where EFTA tariffs still apply [2].

• States can link this to their own export strategies. That is the cooperative-federalism role the Secretary asked them to play [1].

• Learn from Switzerland's own reform: cut the paperwork, not just the duty

• Switzerland expected its tariff removal to save companies admin costs as well as duty, with welfare gains estimated at CHF 860 mn [4].

• The lesson for India: if claiming origin is cheap (digital certificates, self-certification by trusted exporters), small firms will actually use the preference.

• India–EFTA Desk: report investments against the Article 7.1 timeline

• A yearly public figure for EFTA FDI and the jobs linked to it would turn the 'shall aim to' clause [1] into something people can check.

12. Anchors for Answers

• Data: Over 80% of India's imports from EFTA are gold, with no change in effective duty. This keeps the deficit risk from the deal low [2]
• Data: India's farm exports to EFTA were only USD 72.37 mn in FY 2024–25, though farm goods are where the new tariff gains are [2]
• Data: Exports to FTA partners rose 36.3% in Q1 FY27 (NITI Aayog Trade Watch) [5]
• Report/Committee: NITI Aayog, Trade Watch Quarterly (Q1 FY27) [5]; OECD Economic Survey of Switzerland, 2024 [4]
• Law/Case: TEPA Article 7.1, a 'shall aim to' investment and jobs commitment [1]; TRIPS flexibilities kept in the IPR chapter [2]
• Comparison: Switzerland removed all industrial tariffs on its own in January 2024. This shrank the preference margin TEPA can offer Indian industrial goods to zero, and it cut importers' admin costs [4]
• Scheme: PLI Scheme. Tariff cuts on PLI products are phased over 5–10 years to protect new domestic capacity [2]

13. Mains Relevance

• GS-II: bilateral, regional and global groupings and agreements involving India or affecting India's interests.
• GS-III: Indian economy and growth; investment models; external sector and trade policy; effects of liberalisation.
• Possible question stems: 1. "India–EFTA TEPA marks a shift from tariff-centric to investment-linked trade agreements." Critically examine, with reference to the enforceability of its investment commitments. (15 marks) 2. "Low preference utilisation has limited the benefits of India's FTAs." Discuss the reasons and suggest institutional measures, including the role of States. (10 marks) 3. How does TEPA balance market access with protection of sensitive sectors and policy space in IPR and public health? (15 marks)

14. Related Topics to Study Next

• India–EU FTA negotiations: EFTA is separate from the EU; the two tracks are best compared side by side.
• India–UK CETA: Europe's third economic bloc and India's other recent European FTA.
• India–UAE CEPA and India–Australia ECTA: the recent generation of Indian FTAs.
• PLI Scheme: PLI products get phased tariff cuts under TEPA.
• TRIPS and patent evergreening (Section 3(d), Patents Act): background for the IPR chapter's safeguards.
• GATS Modes 1–4 and MRAs: the framework behind TEPA's services commitments.
• Rules of origin and FTA utilisation: the core problem behind the 2026 outreach.
• Export Promotion Councils and the Districts as Export Hubs approach: the delivery machinery for FTA outreach.

15. NCERT Concepts to Revise

• Free trade agreement (Economy): TEPA is an FTA; understanding how tariff elimination and preferences work is the base for the whole note.
• Rules of origin (Economy): Exporters must prove goods originate in India to claim FTA rates; this paperwork explains the utilisation gap.
• Most-favoured-nation principle (Economy): Preference margin is the gap between the MFN rate and the FTA rate; zero MFN means no gain.
• Foreign Direct Investment (Economy): Article 7.1's USD 100 bn 'shall aim to' pledge is about FDI, and its enforceability is a key Mains point.
• Tariff (Economy): Tariff cuts, tariff lines and tariff predictability are central to what TEPA offers exporters.
• Modes of supply of services (Economy): TEPA's services commitments are framed through Modes 1, 3 and 4, including professional mobility.

16. Common Errors / Trap Areas

• EFTA vs EU: no EFTA state is an EU member. Liechtenstein is often forgotten, and the UK and Austria are often wrongly included.
• Signed vs in force: signed 10 Mar 2024, in force 1 Oct 2025. Don't mix these up.
• Mixing up the coverage percentages: 92.2% / 99.6% is EFTA's offer; 82.7% / 95.3% is India's offer.
• "Binding" vs "shall aim to": PIB calls it a binding commitment, but Article 7.1 says "shall aim to" [1][2]. The 50 + 50 split is 10 years + 5 years, not 7.5 + 7.5.
• Name of the agreement: it is a TEPA, not a "CEPA" or "BTIA" (BTIA is the old name for the India–EU talks).