SarhindTimes – Economy & Trade Desk

EFTA Pact Takes Effect: India Eyes $100 B Investments, 1 Million Jobs

New Delhi, October 1, 2025 — In a landmark moment for India’s trade diplomacy, the India-EFTA Trade and Economic Partnership Agreement (TEPA) officially came into force on October 1. This agreement marks India’s first free trade and investment partnership with the European Free Trade Association (EFTA) — comprising Switzerland, Norway, Iceland, and Liechtenstein. Under TEPA, the EFTA states have pledged up to USD 100 billion in long-term investments over 15 years into India, with the goal of facilitating one million direct jobs in Indian industries. The pact also extends tariff liberalization, liberal services commitments, and investment facilitation measures designed to deepen India-EFTA economic integration.

This agreement is not only about trade in goods and services — it also signals a strategic push by India to attract high-quality foreign capital, bolster supply-chain resilience, enable tech and skill transfers, and anchor advanced manufacturing in the country. But the ambitious targets will depend heavily on timely implementation, state-level readiness, policy clarity, and ease of doing business at the ground level.

Below is a deep dive into TEPA’s contours, opportunities, challenges, and the path ahead.

Core Features & Commitments of TEPA

Investment & Job Commitments (USD 100 B, 1 Million Jobs)

A standout feature of TEPA is that, for the first time in any India free trade agreement, the partner bloc pledges a bound investment and job-creation commitment. According to the press release from the Ministry of Commerce & Industry:

Under Article 7.1, EFTA shall aim to channel USD 50 billion in FDI into India in the first 10 years, and another USD 50 billion in the subsequent 5 years — totaling USD 100 billion over 15 years.
Concurrently, the pact seeks to support one million direct jobs generated in India via these investments.
It is important to note that the commitment is for FDI (foreign direct investment) and not merely portfolio or passive capital.

These binding or aspirational investment objectives elevate TEPA beyond a conventional trade agreement, anchoring it in real economic development outcomes.

Goods / Tariff Concessions & Market Access

EFTA will provide tariff reductions and preferential access on 100 % of non-agricultural products and concessions on certain processed agriculture products (PAPs).
The deal’s tariff liberalization on the EFTA side covers 92.2 % of tariff lines, representing 99.6 % of India’s exports to EFTA in value terms.
India’s reciprocal offer covers about 82.7 % of its tariff lines, accounting for 95.3 % of EFTA’s exports to India.
Several sensitive sectors (e.g. dairy, processed foods, certain agricultural items, gold) have been excluded or subject to phased implementation to protect domestic capacity.
The agreement also includes chapters on rules of origin, trade facilitation, sanitary & phytosanitary (SPS) measures, technical barriers to trade (TBT), customs procedures, and other regulatory alignment.

Services, Mobility & Professional Recognition

TEPA features liberal commitments in services sectors across multiple modes: Mode 1 (cross-border delivery), Mode 3 (commercial presence), Mode 4 (temporary movement of natural persons).
A key allowance: TEPA will enable Mutual Recognition Agreements (MRAs) in professional services such as nursing, chartered accountancy, architecture, etc., facilitating mobility and accreditation.
These provisions intend to smooth regulatory barriers for Indian services firms seeking footprint in EFTA markets and vice versa.

Investment Facilitation & EFTA Desk

To operationalize the investment pledge, the Indian government has set up an India-EFTA Desk, functioning as a single-window platform to facilitate incoming EFTA proposals, clearances, and policy-level engagement.
The Desk is expected to drive investment in renewable energy, life sciences, engineering, digital technologies, precision manufacturing, and other high-value sectors.
The Desk will act as the focal point for business-government dialogue and help resolve bottlenecks for EFTA firms.

Sustainable Development & IPR

TEPA includes a chapter on trade and sustainable development, emphasizing green growth, environmental protection, social inclusion, and climate technology collaboration.
On intellectual property, the pact aligns with TRIPS-level commitments, while safeguarding India’s ability to produce generics and manage patent evergreening concerns.

Opportunities & Potential Impact

Investment Mobilization & Economic Growth

The USD 100 billion investment pledge, if realized, could significantly augment capital formation, modernization of infrastructure, and high-productivity sectors.
EFTA firms are strong in precision engineering, specialty chemicals, medical devices, renewable energy equipment, instrumentation, watch / precision instruments, which align well with India’s manufacturing ambitions.
EFTA firms may use India as a hub or base to service global demand, especially for European supply chains seeking diversification from China.
The Desk and associated facilitation tools might ease regulatory friction, helping foreign investors navigate state-level approvals, land, labor, and compliance processes.

Exports & Market Diversification

Indian export engines (textiles, engineering goods, organic chemicals, specialty foods, pharmaceuticals, electronics) may find easier access into high-income EFTA markets.
Tariff relief and streamlined customs / trade facilitation could improve India’s competitiveness on product quality, logistics time, and cost.
Indian MSMEs and contract manufacturers can plug into global value chains supplying intermediates or parts for EFTA industries.

Services & Talent Mobility

Indian services firms (IT, business process, education, health, audio-visual) may see new demand from EFTA markets under favorable service commitment conditions.
MRAs could open pathways for Indian professionals (nurses, accountants, architects) to work or partner in Europe and vice versa.
Digital Mode 1 commitments allow cross-border provision of services (software, professional services) with less friction.

Job Creation & Skill Upgradation

The one million direct job estimate signals potential for high-quality employment—especially in sectors demanding tech, management, precision skills.
This could drive demand for reskilling, vocational training, and engineering / applied sciences capabilities.
States with more pro-active governance, land availability, infrastructure (e.g. Gujarat, Tamil Nadu, Karnataka) may attract larger shares of this investment and job creation.

Strategic & Geopolitical Gains

The pact strengthens India’s engagement with European economic blocs outside the EU, giving an alternate corridor in Europe trade diplomacy.
It complements India’s efforts toward FTAs / trade deals with the EU, UK, and other economies, amplifying India’s global trade architecture.
It may also help India assert leadership in discussions on sustainable trade, green technology, development cooperation.

Challenges, Risks & Conditions for Success

The ambitious aspirations of TEPA will only materialize if a number of risk factors are managed effectively.

Policy Consistency & Regulatory Clarity

Investors need predictable, transparent regulation: timely approvals, stable tax / tariff frameworks, clear investment policies at national and state levels.
Sudden policy reversals, regulatory uncertainty, or inconsistent state-level rules can deter investment or lead to capital flight.

Ease of Doing Business & Bureaucratic Bottlenecks

Land acquisition, labor laws, environmental clearances, infrastructure provisioning (power, water, connectivity) must be streamlined.
Many investors are deterred by delays, procedural opacity, multiplicity of permits, or red tape.
The success of the EFTA Desk depends on its ability to resolve issues across states and central ministries swiftly.

State-Level Readiness & Governance Variation

While the central government can set the broad framework, state governments must deliver on land, infrastructure, skill base, and local incentives.
Disparities in state-level governance, investor friendliness, and local cooperation may skew investment distribution.

Competition from Other FDI Destinations & Blocs

India competes with other emerging markets (Vietnam, Mexico, Eastern Europe, Southeast Asia) for the same global capital seeking diversification.
EFTA firms will weigh relative ease, cost, regulatory stability, and scale when choosing location.

Implementation Lag & Performance Gap

Many commitments are aspirational; actual investment inflows may lag unless actively pursued.
Monitoring, quarterly reviews, corrective mechanisms, public accountability will be essential to close performance gaps.

Global Economic & Geopolitical Risks

Fluctuations in global interest rates, exchange rates, geopolitical turbulence, supply chain disruptions or energy crises could dampen investment flows.
EFTA nations may themselves face recessionary pressures or change priorities.

Sectoral Imbalance & Overconcentration Risk

Certain sectors may dominate investment (e.g. renewables, precision engineering), possibly leaving hinterland, agriculture, or lower-tier industry under-served.
Over-dependence on EFTA commitment may cause external vulnerability if one partner revises its posture.

Implementation & Monitoring: What Comes Next

Quarterly Review & Oversight

As per public statements, quarterly reviews will track agreement outcomes, bottlenecks, and mid-course corrections.
A joint Committee or Joint Council under TEPA may be instituted to oversee execution, resolve disputes, and guide investor policies.

EFTA Desk Activation & Business Outreach

The EFTA Desk must actively conduct outreach, engage prospective investors, facilitate single-window clearances, and coordinate inter-ministerial issue resolution.
State investment promotion agencies must align with the Desk’s priorities and pitch local advantages.

State-Driven Investment Zones & Incentives

States will need to proactively create investment zones, industrial corridors, plug-and-play infrastructure, logistics hubs, aligned with TEPA’s sectoral focus.
Incentivizing anchor projects (large FDI) can attract ancillary investments and spur cluster development.

MSME Integration & Upgrading

MSMEs should be enabled to become part of supply chains linked to EFTA firms — via technology support, quality enhancement, export readiness, standards compliance.
Capacity-building, export facilitation, credit access, and skill training can help small firms capture value.

Data, Transparency & Accountability

Government must publish periodic performance dashboards (investment inflows, job creation, sectoral spread, state distribution).
Independent audits or third-party evaluations may provide credibility and public accountability.

Supportive Reforms in Trade Logistics & Services

Improving logistics infrastructure (ports, cold chain, digital customs), harmonization of standards, simplified trade procedures, and integrated services facilitation will reduce friction.
Strengthening digital infrastructure, IP protection, dispute resolution, and regulatory frameworks will be vital to support high-value investment.

Risks to Watch & Mitigation Strategies

Here’s a snapshot of risks and mitigation approaches:

Risk / Challenge	Mitigation / Policy Response
Investment commitments not met	Tie tariff concessions or benefits to performance; incentivize follow-through; claw-back provisions
State-level disconnects	Build central-state coordination, allow flexibility, conditional matching incentives
Regulatory/clearance delays	Empower EFTA Desk as escalation mechanism, set time-bound approval norms
Global economic shocks	Build resilience via diversified sectors, hedge currency risks, contingency plans
Sector concentration	Encourage balanced investment across high-tech, green, manufacturing, services, regional deployment
Monitoring & accountability gaps	Public dashboards, audits, independent review, stakeholder feedback loops

Conclusion: A Historic Launch, But Execution Will Define Success

The India-EFTA TEPA is a landmark accord — not just another trade pact, but one that explicitly links investment and job creation targets to trade liberalization. If implemented earnestly, it could catalyze high-technology manufacturing, deepen services exports, diversify supply chains, and serve as a template for future pacts.

However, the $100 billion investment and 1 million jobs targets are not automatic. They hinge on governance, ease of doing business, state capacity, regulatory consistency, and active servicing of investor concerns. The EFTA Desk, state agencies, MSMEs, and central ministries must function in sync to turn vision into reality.

As TEPA comes into force, attention will now shift from signing to doing—turning commitments into capital, plans into projects, and promise into prosperity.

#EFTA #TEPA #Trade #Investments #Jobs #MakeInIndia