INDIA’S trade spectrum witnessed a watershed moment when the country signed Free Trade Agreement (FTA) with the four-nation European bloc European FreeTrade Association (EFTA). The pact came after a long negotiation of sixteen years and has now opened a new avenue for Indian businesses seeking to spread wings in the European markets. The EFTA has also marked a new chapter in the history of FTAs as it has eked out a binding pledge from the bloc of USD 100 billion investment and one million direct jobs in the next 15 years. This pledge is the biggest clincher in the trade deal which is set to open up a gush of opportunities for India’s businesses and workforce. The EFTA will turn out to be a mutually beneficial instrument for both the partners as it starts a shared commitment of investments and related discounts through zero or negligible duties.

 

It will jack up the trade volumes between the European countries and India, and will ultimately help in cutting down the trade deficit that was not sitting right with the changed nature of India’s economy. Being the fastest growing economy in the world with little impact of global headwinds, it was time India got its due share as a preferred investment destination and a reliable trade partner.

 

The EFTA largely addresses the issue and is set to act as a benchmark for future FTAs India has in the pipeline, including the trade deal with the United Kingdom. Due to its greater complimentaries and lesser intricacies, the EFTA can also be relied upon for dealing with bigger markets and high tariff destinations. India does have a potential to invest more in major markets and at the same time attract foreign businesses to its shore with the plethora of production-linked scheme rolled out for domestic sectors. It can easily rise as a preferred investment destination in a trade world dominated by a hegemonic power like China.

 

With the small European bloc as partner, India can now leverage its position in the larger markets of the European Union (EU) and also control negotiations with Britain in the stop-start Indo-UK FTA talks. What the EFTA will achieve is a giving credence to more Indian businesses which diversify their supply chains by gaining access to major growth market. India businesses have already made their mark in various important sectors around the world. Europe remains a big potential which can be explored by Indian industry. Despite the strict regulations of the EU guidelines India has resiliently and rightly embarked upon a mission to forge partnerships with smaller blocs in Europe. The EFTA has opened doors for more such alignments with a cluster of markets which hold potential for growth in the coming years. Investments from such destinations under the ‘Aatmanirbhar Bharat’ initiative would be a boon not just for the partners but also local industries which can work wonders with foreign investments. The double engine of PLI and FDI would be a win-win situation for India as well as the investors.

 

There is more to India in the deal than the import of dutyfree consumer goods and export of quality products in the European markets. The binding commitment of USD 100 billion and one million jobs is a massive gain on which India can build its future domestic industry policy. India has also managed to put the critical provision of “rebalancing or suspending” of duty concessions if the proposed investment did not come for some reasons in the next 15 years in the trade agreement. This is another first that the trade negotiators have achieved and it brings a tremendous sense of security among the investors as well as the businesses. The booster now should be canvassed in further FTAs.