TEPA Goes Live: What India–EFTA Deal Means for Exporters, Investors & Consumers

India’s long-awaited trade and economic deal with the European Free Trade Association (EFTA) takes effect on 1 October 2025. This is India’s first full trade agreement with a European group.

The Trade and Economic Partnership Agreement (TEPA) was signed on 10 March 2024, after almost 16 years of talks. It now comes into force with hopes of bringing new investments and wider export opportunities.

The TEPA is important because it is India’s first trade agreement with a group of European countries. India has already signed a similar agreement with the United Kingdom, but it will take approximately a year for it to become active. At the same time, talks are still ongoing for a much larger trade pact with the European Union, which has 27 member nations.

Key Features of the TEPA

• Tariff Lines & Phased Reductions

Under the deal, EFTA will reduce or remove duties on 92.2% of its products, which covers almost all of India’s exports to those countries. This includes key items like machinery, textiles, medicines, and processed foods. In return, India will lower duties on 82.7% of its products, which together make up 95.3% of what EFTA exports to India.

Tariff reductions will be implemented in stages, with some reductions removed immediately and others phased out over several years. Notably, India has excluded key sensitive segments, such as dairy, coal, processed food, soy, medical devices, and gold, which account for over 80% of EFTA’s exports to India, from tariff changes. Basmati and non-basmati rice will see duty-free access to EFTA markets without reciprocal concessions from the bloc.

• Investment & Job Creation Mandate

A key highlight of the pact is EFTA’s binding promise to invest $100 billion in India over 15 years, aimed at creating 1 million direct jobs. The investment will come in two stages: $50 billion in the first 10 years and another $50 billion in the next five. This commitment excludes short-term portfolio investment and focuses only on long-term capital in productive sectors.

To support these inflows, India set up a special India-EFTA Desk earlier this year. This desk acts as a single-window platform for EFTA investors, helps promote joint ventures, simplifies regulations, and keeps communication open between businesses and the government.

• Market Access in Services, IP, Trade Commitments

The pact spans 14 chapters, covering goods, services, intellectual property, competition, government procurement and environmental standards. Services commitments include sectors such as education, business services, audio-visual, and professional mobility, with mutual recognition agreements envisaged. The IPR (intellectual property rights) chapter is aligned with TRIPS standards. This keeps India's current policy options flexible so it can support its generic drug industry and prevent patent evergreening under its domestic law.

Implications for Indian Traders, Exporters, and Investors

• Export Opportunities and Competitive Pressures

The pact gives Indian exporters duty-free or lower-duty access to EFTA countries - Switzerland, Norway, Iceland, and Liechtenstein. Industries likely to benefit include agriculture and related goods, tea, coffee, textiles, leather, seafood, gems and jewellery, electronics, software, engineering goods, and speciality chemicals. For EFTA customers, Indian duties will gradually come down, making chocolates, watches, wines, clothes, and clocks cheaper over time.

However, some Indian industries may face more competition from European imports, especially in capital goods and precision instruments. A phased rollout and exclusion of certain sensitive items will offer some protection.

• Investment Flows and Capital Markets

The significant foreign direct investment commitment could bring in fresh capital for expansion, new capacities, and technology transfer. This may translate into favourable conditions for listed companies in sectors targeted by EFTA investors, such as renewable energy, life sciences, engineering, and digital transformation. However, actual disbursement will depend on global risk appetite, regulatory consistency, and India’s ease of doing business regime. The India-EFTA Desk aims to lower procedural friction, but execution will be key.

• Broader Trade Strategy and Global Context

The TEPA complements India’s efforts to diversify away from overreliance on a few large markets and integrate into global value chains. It also positions India better in ongoing trade negotiations with the EU and the United States.

For Indian capital markets, the deal could shift investor sentiment toward sectors aligned with export or investment themes. Private equity and strategic foreign investors may gain confidence in bilateral risk frameworks.

What Traders and Investors Should Watch Going Forward

• Implementation timelines for tariff cuts and their glide paths
  
• Disbursement pace of EFTA investment commitments
  
• Sector-level allocations by EFTA investors
  
• Performance of export-oriented stocks in textiles, engineering, and pharma
  
• Macro balance of trade impact with EFTA over the coming quarters
  
• Policy stability and regulatory ease in execution
  

In short, TEPA brings a structured opportunity for Indian exporters and investors to link with European markets, backed by capital and institutional support. But the real test will lie in translating the pact’s promise into trade volumes, job creation, and returns.

Sources

Money Control
Press Information Bureau, Government of India
Press Information Bureau, Government of India
India Shipping News
Akashvani, Government of India
The Economic Times
Insights IAS
DD News
Business Standard