Introduction to TEPA and the EFTA-India Partnership
In March, the Trade and Economic Partnership Agreement (TEPA) was signed between India and the European Free Trade Association (EFTA), which includes Switzerland, Norway, Iceland, and Liechtenstein. This significant partnership, projected to bring $100 billion in investments to India, aims to enhance access to India's 1.4 billion-strong market. The agreement, once ratified, promises lower costs and easier market entry for Swiss companies, facilitating a strategic shift from the traditionally China-focused investments.
Increased Swiss Investments in India
Swiss companies such as ABB, a global leader in automation technology, and logistics giant Kuehne+Nagel are expanding their Indian operations. With TEPA expected to streamline market access, Swiss investments in India are poised to increase, particularly as companies seek alternatives amid US-China trade tensions and China’s slower economic growth. India’s appeal stems from its burgeoning economy, which is anticipated to grow at a rate surpassing China’s, driven by structural reforms and robust domestic demand.
Incentives Under TEPA and India’s Economic Potential
The TEPA agreement, once implemented, will slash tariffs on a wide array of Swiss exports, including machinery, chocolate, and watches, further incentivizing Swiss investments. EFTA member companies are projected to gain tariff-free access on 94.7% of their exports, offering a distinct competitive edge over EU and UK firms, who are still negotiating trade agreements with India. This preferential access aligns with India’s goal to boost exports of its own products, such as pharmaceuticals, textiles, and machinery.
ABB and Swiss Firms’ Expansion in India
ABB’s CEO, Morten Wierod, highlighted the company’s extensive expansion in India, driven by 27% annual order growth over the past three years. ABB has invested in multiple new facilities across India, increasing its workforce by 67% since 2020. While ABB remains committed to its Chinese operations, its substantial investment in Indian R&D and manufacturing reflects a growing focus on India’s potential as a top market.
TEPA’s Expected Ratification and Long-term Outlook
Although TEPA has yet to be ratified, Swiss business leaders anticipate it will create a favorable environment for investments and trade. Parliamentary approval is expected by 2025 or 2026, bringing a long-term vision of increased Swiss presence in India’s growing economy. According to the International Monetary Fund (IMF), India’s growth rate is forecasted to remain strong, outpacing China's and sustaining investor interest.
Swiss-Indian Chamber of Commerce’s Perspective on TEPA
Philippe Reich, chairman of the Swiss-Indian Chamber of Commerce, calls TEPA a “game changer.” He notes that around 350 Swiss companies already operate in India, with many more expected to follow. The shift from China is partly driven by a growing awareness of economic and geopolitical risks associated with the Chinese market, creating a strong case for India as an alternative.
Government Initiatives and Infrastructure Boosts
TEPA will enhance business conditions with reduced tariffs and administrative hurdles, according to Swiss Business Minister Guy Parmelin. Florin Mueller, head of the Swiss Business Hub in Mumbai, highlighted that TEPA would serve as a “red carpet” for Swiss companies, setting India apart as a prime investment destination. Notably, India’s National Logistics Plan is improving infrastructure, with large investments in transport networks that ease operational costs for companies like Kuehne+Nagel.
Smaller Swiss Companies Expand in India
Feintool, a precision component manufacturer, is establishing its first factory in Pune, reflecting a growing interest among smaller Swiss firms. The facility, designed to meet local and international demand, marks a trend of medium-sized companies benefiting from India’s growing manufacturing ecosystem. With more flexible sourcing and proximity to customers, firms like Feintool foresee substantial business potential in the Indian market.
Conclusion: A New Chapter for Swiss-Indian Trade Relations
With TEPA expected to drive $100 billion in EFTA investments over 15 years, India is set to gain from increased job creation, enhanced manufacturing capabilities, and strengthened trade ties. As Swiss companies deepen their presence in India, TEPA positions India as an emerging leader in the global trade landscape, offering new avenues for both Swiss businesses and the Indian economy
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