Edited by Deepali Verma
Bharat is in the end stage of finalising a first-of-its-kind trade deal that could see a small group of European nations invest close to $100 billion over 15 years in exchange for easier trade access to the world’s most populous nation, as per the people with knowledge of the matter.
The European Free Trade Association, comprising Switzerland, Norway, Iceland as well as Liechtenstein, made a commitment to invest in Bharat as part of a trade pact that’s in the final stages of negotiations, said the people, asking not to be identified as the conversation was still going on.
The details of the deal have been agreed upon and deliberations currently stand on the final investment amount, which could be close to $100 billion over 15 years, some of the people said. While Bharat wants the commitment to be legally binding, one of the European officials said the amount will be framed mainly as a goal, having no legal means to claim it included in the language of the agreement.
If the deal comes through, it would mark the first time an investment commitment of this nature is secured by Bharat as part of a free trade agreement.
Without listing out the details, Switzerland’s Economy Minister Guy Parmelin said last month that the outline of a deal had been agreed upon. Legal clarifications are currently underway so the deal can be inked before Bharat holds elections likely from April, a European official with regard to the knowledge of the matter said.
The Swiss economy ministry released in a statement that the main points where agreement has been reached covers the patent protection, which was controversial in the past, as well as a new type of investment promotion chapter” it said.
Norway’s government combined with the Bharat’s Ministry of External Affairs declined to comment on the terms of the deal.
Trade Bloc
Switzerland is by far Bharat’s largest commercial partner among the EFTA bloc, which includes the European nations which are non-members of the European Union. Swiss two-way trade with Bharat was close to $17.14 billion in the 2022-23 fiscal year, out of the total $18.66 billion with the whole group.
For EFTA countries, the agreement that has been 16 years in the making, allows manufacturers to export processed food along with beverages, electrical machinery and other engineering products owing to reduced tariffs to a potential market of 1.4 billion people. The deal holds the benefits for the pharmaceutical and medical devices industry of the bloc.
Bharat is attracting investor interest from numerous countries as businesses are looking for opportunities to diversify their supply chains from China and seek new growth markets. Bharat expects growth of close to 7% in the fiscal year beginning in April, labelling it one of the fastest-expanding major economies in the world. The United Arab Emirates is additionally considering investing as much as $50 billion in Bharat.
The investment in Bharat from EFTA countries would mostly be pooled from private businesses as well as state-sponsored vehicles and would be targeted toward existing and new manufacturing projects, as per the sources. The investment will see more than 1 million jobs created in Bharat, one of the people said.
The deal would facilitate easier movement of Bharatiya professionals to the bloc and market access for some agricultural products, the people said. Switzerland is the biggest economy in the EFTA bloc and is usually very protective of its farmers. Easier market access for Bharatiya rice could be acceptable since Switzerland only produces marginal quantities itself, a person in loop with the negotiations said.
