India's Trade and Economic Partnership Agreement (TEPA) with the European Free Trade Association (EFTA), signed on March 10, will take at least a year to get implemented, given the lengthy ratification process, an Indian government official said.
"The offers made through the trade agreement will kick in only after the pact comes into force, which will take around a year since they (EFTA nations) have an entire ratification process," this official said.
For the trade agreement to kick in, one of the parties involved - Switzerland may take the referendum route before green lighting the India-EFTA deal from their end. A referendum is a vote in which the people of a nation are asked to either accept or reject a particular proposal.
A second government official told Moneycontrol that after signing, the agreement requires ratifications from all parties involved. "It needs to go to Parliament. And, in the case of Switzerland, there may be individual voting to clear the trade deal after their Parliament passes it, which was the same in the case of Indonesia's Comprehensive Economic Partnership Agreement (CEPA) with Switzerland" .
The CEPA between EFTA and Indonesia was signed on December 16, 2018 and the trade agreement entered into force close to three years later, on November 1, 2021 after the ratification process was concluded by all parties involved.
Voters in Switzerland gave the green light to CEPA with a small majority of 51.6 percent.
The trade and investment agreement between India and the four-nation grouping of Iceland, Liechtenstein, Norway, and Switzerland that was inked last weekend in New Delhi weaves in an investment commitment of $100 billion from EFTA countries over the next 15 years.
India has offered greater market access to these nations by reducing customs duties in phases on a range of items, including medical devices, watches, and certain electric machinery products.
Negotiations on a broad-based trade and investment agreement between the EFTA states and India were launched in January 2008, but after 13 rounds of negotiations, talks were paused in 2013.
Talks resumed in October 2016. And, after around 21 rounds of negotiations, the trade pact between the two sides has been inked. The agreement has 14 chapters, which include areas such as goods, services, rules of origin, intellectual property rights (IPRs), and investment promotion.
Total trade between India and EFTA nations stood at around $18.66 billion in 2022-23, with the largest share belonging to Switzerland, followed by Norway.
According to estimates from Global Trade Research Initiative, Switzerland accounts for 91 percent of bilateral merchandise trade, making it India’s largest EFTA trading partner.
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