The recently signed India-European Free Trade Association (EFTA) is set to usher in a new era of collaboration, with a particular focus on boosting Indian textiles, fostering innovation, and attracting significant investment. Following its anticipated ratification in the first quarter of 2025, the pact promises streamlined processes and institutional support for businesses on both sides.
While the TEPA encompasses diverse sectors like renewable energy, pharmaceuticals, and IT, the textiles industry stands to gain considerably. India’s commitment to eliminating tariffs on garments imported from EFTA countries, particularly Switzerland, is expected to enhance market access for European textile manufacturers while potentially stimulating domestic production of higher-value textile products in India.
Beyond trade liberalization, the agreement emphasizes fostering innovation. EFTA countries, known for their strong focus on research and development, are keen to collaborate with Indian businesses, particularly small and medium-sized enterprises (SMEs). The Director General of Innovation in one of the EFTA nations is actively exploring ways to connect trade bodies and facilitate opportunities for these SMEs to scale up their operations within India and leverage the country as a base for global exports. This focus on SME collaboration could lead to advancements in textile technologies, sustainable manufacturing practices, and the development of new textile materials.
The TEPA also includes a commitment from EFTA nations (Switzerland, Iceland, Norway, and Liechtenstein) to invest $100 billion in India over 15 years, with the creation of one million jobs as a key objective. This substantial investment is expected to flow into various sectors, including textiles, further bolstering the industry’s growth and modernization. The establishment of “institutional mechanisms” for fast-track clearances will prioritize investments from EFTA countries, ensuring efficient and seamless implementation of projects. These mechanisms will address administrative hurdles faced by investors, providing them with dedicated support and facilitating smoother operations.
Recent high-level meetings, such as the discussions between Commerce Secretary Sunil Barthwal and Norway’s Trade Secretary Tomas Norvoll, have further solidified the commitment to the TEPA. These discussions have covered a wide range of topics, including promoting trade and investments, enhancing mobility for Indian professionals, and finalizing the next steps for TEPA ratification. The engagement with business stakeholders, including the Norwegian Chamber of Commerce and various industry leaders, underscores the importance of private sector involvement in realizing the full potential of the agreement.
With Switzerland already a significant investor in India, and the new TEPA mechanisms designed to prioritize EFTA investments, the pact is poised to significantly impact the Indian textile sector, driving innovation, attracting foreign direct investment, and creating new opportunities for growth and collaboration.
