With the UK still struggling to iron out the details of a post-Brexit free trade agreement with India, New Delhi has instead clinched a landmark deal with four European nations that it claims will result in $100bn (£78bn) of investment in the country.
The agreement was signed between India and the European Free Trade Association (Efta) bloc of non-EU nations – Norway, Switzerland, Iceland and Liechtenstein – after 16 years of negotiations. The EU is also engaged in a race to reach its own trade deal with India.
Under the deal, the four European countries will invest $100 bn in India over the next 15 years and create over million jobs. In return, India will lift or partially remove what are currently very high customs duties on industrial goods from the four countries.
The deal was unveiled by the Modi administration with just days to go before the expected start of the general election. Prime Minister Narendra Modi said the conclusion of what he called “one of the most pioneering free trade agreements ever” was a “watershed moment”.
“This landmark pact underlines our commitment to boosting economic progress and creating opportunities for our youth,” he said. “The times ahead will bring more prosperity and mutual growth as we strengthen our bonds with Efta nations.”
It means India has now signed three trade deals in the past two years, with Australia, the UAE and now the Efta bloc, while negotiations for a UK-India free trade agreement that would double trade to £86 billion are frozen in the final stages after some 14 rounds of talks.
Indian trade minister Piyush Goyal said the deal with the European bloc marked the “first time in the history of the world that we are inking an agreement with a binding commitment” for investment. He claimed that it shows “investor confidence in India is at an all-time high”.
The pact covers some new elements, such as intellectual rights and gender equality, Goyal added: “It is a modern trade agreement: fair, equitable, and win-win for all five countries.”
The agreement will provide advantages to the pharmaceutical and medical devices sector within the bloc. Indian exporters will enjoy expanded access for their rice and other goods to European nations, while high-end Swiss watches will gradually become more affordable in India.
Swiss machinery manufacturers, producers of luxury goods, and transport sectors are anticipated to gain, according to the Swiss government. India has extended an invitation to Swiss transport companies to invest in its railways.
The agreement gives Efta nations the chance to export processed food and beverages, electrical machinery, and various engineering products to a potential market of 1.4 billion people at reduced tariffs.