The Gateway to Europe

On March 10, India signed a trade pact with the fournation European Free Trade Association (EFTA), an intergovernmental grouping of Switzerland, Norway, Iceland and Liechtenstein. As part of it, the countries have committed to invest $100 billion (over Rs 8 lakh crore) in India, which is expected to generate one million jobs in 15 years.

- M.G. Arun

EFTA is an inter-governmental organisation set up in 1960 for the promotion of free trade and economic integration for the benefit of these four member countries outside the European Union. Piyush Goyal, Union minister of commerce and industry, food and consumer affairs and textiles, termed it a “modern and ambitious trade agreement”. “For the first time, India is signing an FTA with four developed nations—an important economic bloc in Europe. For the first time in the history of FTAs, a binding commitment of $100 billion investment and one million direct jobs in the next 15 years has been given,” he said. The agreement, which came after 15 years of negotiations, will give a boost to ‘Make in India’ and provide a window to Indian exporters to access large European and global markets, he added.

The deal is structured in such a way that, after 15 years, there will be a review. If there is a shortfall, EFTA would have to offset it in the next three years. After 20 years, if there is an investment shortfall, India can withdraw the tariff advantages it had offered, says Ajay Sahai, director general and CEO of the Federation of Indian Export Organisations.