NEW DELHI: India will link duty cuts under the
trade deal
with the
European Free Trade Association
(EFTA) with
investment
by companies from the member nations — Switzerland, Norway, Iceland, and Liechtenstein — which have together vowed to invest $100 billion over 15 years.
“We will assess how much investment has come in during the review meetings and then decide the extent of tariff cut,” a senior official said.
This is the first time that a mechanism like this is being tried out as countries, such as, Switzerland have done away with import duty on industrial goods, while retaining them on farm products. The tariff reduction could include items such as watches, wine, chocolates and machinery.
The free trade agreement is to be signed on Sunday after the Union cabinet cleared it on Thursday evening, although a formal announcement is yet to be made. Talks for the pact began in 2008 but were suspended after the Modi govt came to office in 2014 and resumed last year after India stepped up its trade engagement with several countries, including the UK, European Union, Mauritius, Australia, UAE and Canada.
While India will reduce bound rate (maximum levy) for gold — a key ask from the trading bloc, especially Switzerland — from 40% to 39%, effective duty (15%) will remain unchanged, an official said. Besides, govt has stuck to its stand on intellectual property rights and made it clear that data exclusivity related concessions were not on offer, although it was willing to engage on specific issues related to patents. An easier patent regime was a major demand from Swiss pharma companies.
Trade agreements with Mauritius, Australia and UAE have been signed, although the one with Canada has been put on hold after a diplomatic row. The proposed agreement with EU is moving slowly, while the UK is seeking to strike a hard bargain. While offering a “good deal”, India is not going to rush ahead with a deal with the UK, arguing that the country’s interest need to be fully protected, officials said. The proposed agreement with Oman is also going to take time as the commerce department has not finalised the proposal for the cabinet, sources said.
“Successfully concluding FTA with developed countries like Switzerland, and Norway would send a positive signal to world. It will showcase India’s firm commitment to trade liberalisation in the time when whole world is turning protectionist,” think tank GTRI said, while cautioning against limited gains on goods exports for India. “In services sector, the agreement aims to open up sectors like IT, finance, tourism, and education, allowing Indian and EFTA service providers to operate in each other’s markets with fewer restrictions. However, the potential gains in services are limited, as countries typically agree to bind existing levels of policy commitments, implying a continuation of the status quo,” it added.