Sweet Deal: Swiss Chocolates and Wines Get Cheaper in India!

Swiss chocolates and wines are set to become more affordable in India thanks to a new trade agreement. India has signed the Trade and Economic Partnership Agreement, or TEPA, with the European Free Trade Association, which includes Switzerland, Norway, Iceland, and Liechtenstein. This deal, which was signed in March 2024 and came into effect on Wednesday, will reduce tariffs on 80 to 85 percent of goods imported from these countries to zero. In return, Indian exporters will be able to sell 99 percent of their goods in EFTA markets without paying any duties.

The agreement is significant because it is the first time India has linked market access directly to investment commitments in a trade deal. Both sides have pledged to invest $100 billion and create one million direct jobs over the next 15 years. Experts say this marks a strategic shift in how trade agreements are negotiated, with investment promises now playing a key role alongside tariff reductions. For Indian consumers, this means that products like Swiss chocolates and wines will become cheaper, while EFTA countries will benefit from zero tariffs on Indian medicines, dyes, textiles, and iron and steel products over the next five to ten years.

Last year, India imported $32. 4 billion worth of goods from EFTA countries, with Switzerland accounting for a third of that amount. Gold imports made up about $18 billion, but the new trade deal does not change the duties on gold. India's exports to EFTA countries were $2 billion, with 98 percent being industrial goods. However, since industrial goods already have zero duty, India is not expected to see much additional benefit in this area. Ajay Srivastava from the Global Trade Research Initiative in Delhi says that any gains from the deal may come more from changing perceptions than from actual tariff reductions, as this is India's first trade agreement with a European country. He believes the deal sends a message to the world that India is willing to open up its markets.

The agreement comes at a time when the United States has imposed steep 50 percent tariffs on Indian goods, and trade talks between the two countries are ongoing. India is also negotiating several other trade deals to counter the impact of US tariffs. In July, India signed a Free Trade Agreement that is expected to take effect by 2026, and it is currently working on a similar agreement with the European Union. The EU is India's largest trading partner in goods, with bilateral trade reaching $135 billion in 2022-23 and nearly doubling over the past decade.

Overall, the new trade deal with EFTA is expected to benefit Indian consumers by making Swiss chocolates and wines more affordable, while also providing new opportunities for Indian exporters. The agreement represents a new approach to trade negotiations, with investment commitments playing a central role. As India continues to pursue more trade deals, it is sending a clear signal to the global community that it is open to liberalizing its markets and expanding its economic partnerships.