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Strengthening EU-India Relations: The Potential Impact of the EFTA-India Deal

Updated: Apr 20

Introduction: Signing of the EFTA-India Deal

The relationship between the European Union (EU) and India has evolved significantly over the years, driven by shared values, mutual interests and growing economic interdependence. As both regions seek to deepen their ties, negotiations for the European Free Trade Association (EFTA)-India deal present a promising opportunity to enhance trade and strategic cooperation. Last month, India finally signed a Trade and Economic Partnership Agreement (TEPA) with the EFTA, which includes four non-EU countries- Iceland, Liechtenstein, Norway and Switzerland. The deal was reached following extensive negotiation rounds and encompasses various elements concerning trade in goods and services, intellectual property rights (IPR), investment facilitation, sustainable development, as well as labour and human rights, alongside mechanisms for dispute resolution. It aims to diminish or remove tariffs on goods and services, streamline investment inflows, and improve regulatory collaboration. Through advocating for trade liberalisation and widening market accessibility, the agreement has the capacity to generate fresh prospects for enterprises and foster economic expansion in both territories.

Source: EFTA and India Sign Trade and Economic Partnership Agreement. EFTA and India sign Trade and Economic Partnership Agreement | European Free Trade Association. (2024, March 10).

Source: EFTA and India Sign Trade and Economic Partnership Agreement. EFTA and India sign Trade and Economic Partnership Agreement | European Free Trade Association. (2024, March 10).

Overview of the EFTA-India Deal

One of the key benefits of the EFTA-India deal is its potential to boost bilateral trade and investment flows. By reducing trade barriers and enhancing market access, the agreement could lead to an increase in trade volumes between the EU and India. This, in turn, could contribute to GDP growth, job creation, and enhanced competitiveness for businesses in both regions. Moreover, the deal could facilitate technology transfer, innovation, and collaboration in strategic sectors, such as renewable energy, healthcare, and information technology. Beyond its economic implications, the EFTA-India deal holds strategic significance for both the EU and India. Strengthening trade ties can serve as a catalyst for deeper cooperation on security, defence, and regional stability. By forging closer economic relations, the EU and India can work together to address common challenges, such as terrorism and climate change. Moreover, the deal could enhance geopolitical alignment and cooperation, particularly in the context of shifting global power dynamics.

Source: Briefing, I. (2024, February 26). India-EFTA trade negotiations near consensus stage. India Briefing News

Source: Briefing, I. (2024, February 26). India-EFTA trade negotiations near consensus stage. India Briefing News

Some challenges on its way

While the EFTA-India deal presents significant opportunities, it also faces several challenges and obstacles. Negotiations may encounter resistance from domestic industries, political opposition, and regulatory differences between the EU and India. Additionally, issues related to intellectual property rights, labour standards, and environmental regulations may need to be addressed to ensure a balanced and mutually beneficial agreement. However, with political will and diplomatic engagement, these challenges can be overcome to pave the way for a successful deal.

The EFTA-India deal not only promotes trade but also opens avenues for collaboration beyond the economic sphere. It provides an opportunity for the EU and India to deepen cooperation in research, innovation, and technology exchange. Joint initiatives in areas such as clean energy, digital transformation, and sustainable development can drive inclusive growth and address shared global challenges. Moreover, the deal can facilitate cultural exchanges, academic partnerships, and people-to-people ties, fostering greater understanding and goodwill between the two regions.

As negotiations progress, it is essential to consider the environmental and social implications of the EFTA-India deal. Sustainability should be at the forefront of trade policies, with measures in place to promote responsible production and consumption. Moreover, the deal should uphold labour standards, human rights, and social welfare, ensuring that economic growth is inclusive and equitable. By incorporating environmental and social considerations, the EU and India can demonstrate their commitment to sustainable development and ethical trade practices.

The potential impact of the EFTA-India deal on EU-India relations

While the EFTA-India deal may not directly impact the substance of the EU-India FTA negotiations, it can certainly influence the broader context, dynamics and momentum of the negotiations, thereby affecting the likelihood and timeline of reaching a final agreement. The conclusion of the EFTA-India deal could provide momentum and impetus to the stalled negotiations between India and the EU on the FTA. The successful conclusion of trade agreements with other blocs or countries often serves as a positive signal for ongoing negotiations, encouraging both parties to make progress and reach a mutually beneficial agreement. Moreover, the terms and provisions of the EFTA-India deal may influence the discussions and outcomes of the FTA negotiations between India and the EU. If the EFTA-India deal includes provisions that are similar to those under consideration in the EU-India FTA negotiations, it could set precedents or benchmarks for certain aspects of the agreement, such as tariff reduction schedules, rules of origin, or regulatory cooperation.

Source: Briefing, I. (2024b, March 12). India, EFTA sign tepa deal: Key terms negotiated. India Briefing News.


In conclusion, expediting the signing of the EFTA agreement with India holds significant implications for both EU-India FTA negotiations and broader relations between the EU and India. By demonstrating progress in trade negotiations and paving the way for increased economic cooperation, the EFTA agreement with India can contribute to strengthening ties between the two regions and advancing shared objectives of prosperity, stability, and mutual benefit. The EFTA-India deal represents a significant opportunity to strengthen EU-India relations and unlock the full potential of bilateral cooperation. By fostering closer economic ties, the agreement can stimulate trade and investment, promote innovation, and advance shared strategic interests. As negotiations continue, it is imperative for both parties to address challenges, seize opportunities, and work together towards a comprehensive and mutually beneficial agreement that enhances prosperity and stability in the EU and India.

(Srishti is a research fellow at the Europe India Centre for Business and Industry.)


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