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Trade and Economic Partnership Agreement (TEPA)

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 14-Mar-2024

Source: The Hindu

Introduction

India's diplomatic landscape witnessed a milestone on 10th March 2024, as it inked the Trade and Economic Partnership Agreement (TEPA) with the European Free Trade Association (EFTA), comprising Switzerland, Iceland, Norway, and Liechtenstein. The culmination of this pact, which has been in gestation since 2008, marks an important moment for India's trade relations, particularly with Western nations.

What are the Highlights of the Trade and Economic Partnership Agreement (TEPA)?

    • Investment and Job Creation:
      • EFTA pledges to boost investments in India by USD 100 billion over 15 years, aiming to generate 1 million direct jobs, excluding portfolio investment.
    • Unprecedented Commitment:
      • For the first time in FTAs, a legal commitment is made to promote target-oriented investment and job creation.
    • Market Access:
      • EFTA offers significant tariff reductions covering 92.2% of tariff lines, including 100% of non-agricultural products, benefiting Indian exports.
    • Reciprocal Tariff Reductions:
      • India reciprocates with tariff cuts on 82.7% of its tariff lines, securing market access for EFTA exports, with sensitivity to certain sectors.
    • Sectoral Commitments:
      • India offers access to 105 sub-sectors to EFTA countries, securing commitments in various sectors, notably in services such as IT and business services.
    • Services Trade Enhancement:
      • TEPA facilitates better access to services trade, including digital delivery and mutual recognition agreements in professional services.
    • IPR Commitments:
      • Intellectual property rights commitments align with TRIPS standards, addressing India's interests in generic medicines and patent concerns.
    • Sustainable Development:
      • The agreement underscores commitments to sustainable development, inclusive growth, and environmental protection.
    • Boost for "Make in India":
      • TEPA aims to bolster domestic manufacturing in key sectors, providing impetus to "Make in India" and self-reliant India initiatives.
    • Access to EU Markets:
      • TEPA offers a gateway for Indian companies to integrate into EU markets, leveraging Switzerland's strong ties with the EU.
    • Job Creation and Skill Development:
      • TEPA is expected to generate significant direct jobs in India, especially for the youth, and facilitate technology collaboration and access to cutting-edge technologies.

What are Opportunities for Growth in Trade and Economic Partnership Agreement (TEPA)?

  • The TEPA unlocks a plethora of opportunities for India's services sector, offering easier market access and streamlined visa regulations.
  • Professionals, spanning from architects to nurses, are poised to benefit from enhanced opportunities.
  • Moreover, the agreement aims to catalyze a staggering $100 billion influx of foreign direct investment (FDI) into India over the next 15 years, promising to create a million jobs.
  • With the prospect of cheaper imports, Indian consumers can anticipate a windfall, while producers stand to gain access to cost-effective machinery.

How TEPA is a Testament to India's Trade Agility?

  • India's swift execution of the EFTA deal underscores its commitment to fostering international trade alliances.
  • This marks the second major trade agreement in recent years, following the deal with the United Arab Emirates.
  • Notably, it represents India's first such arrangement with a Western nations' bloc, signaling a departure from its erstwhile reluctance towards trade pacts since 2014.
  • By embracing free trade amidst a global wave of protectionism, India sends a powerful message about its evolving economic stance.

What are Non-Trade Issues in this Agreement?

  • The TEPA sets a precedent by incorporating non-trade issues such as labor rights, environmental protection, and gender equality.
  • While the necessity of integrating these issues into trade agreements may be subject to debate, it aligns with the priorities of potential allies like the European Union (EU), bolstering India's credibility as a responsible global actor.

How TEPA wil Shape India's Economic Landscape?

  • The TEPA's provisions encompass a wide array of sectors, from market access and investment promotion to intellectual property rights and sustainable development.
  • With commitments to boost services exports and stimulate domestic manufacturing under the “Make in India” initiative, the agreement heralds a transformative shift in India's economic trajectory.
  • Moreover, it positions India to integrate seamlessly into EU markets, offering a gateway for Indian companies to expand their global footprint.

Conclusion

As India embarks on this new chapter of trade relations with EFTA nations, the TEPA symbolizes more than just a bilateral agreement. It represents a strategic pivot towards openness and cooperation in a rapidly evolving global landscape.