One million new jobs likely as European Free Trade Association signs ‘watershed’ pact with India

Bringing to life the ‘Better late than never’ adage, India and the European Free Trade Association (EFTA) have sealed a groundbreaking agreement after 16 long years of negotiation. The $100bn treaty with the four-member European bloc --- comprising Switzerland, Norway, Liechtenstein and Iceland --- marks a significant milestone in bilateral trade relations. As part of the deal, India will lift most import tariffs on industrial products from these countries in return for investment over 15 years. The agreement, termed ‘watershed’ by analysts and Prime Minister Narendra Modi himself, includes trade in goods, services, investments and intellectual property rights. It aims to dismantle trade barriers, streamline regulatory frameworks and foster a more conducive environment for commerce between India and the EFTA member States. The culmination of this prolonged negotiation process has far-reaching implications, particularly in terms of job creation in India. With an estimated one million jobs likely to be created across sectors, the agreement holds immense promise for the Indian workforce, especially at a time when the global economy is facing a variety of challenges. The job creation potential stems from several factors embedded in the pact. The agreement provides Indian businesses with enhanced access to the markets of EFTA countries, facilitating increased exports of goods and services. This expanded market reach is expected to spur demand for Indian products, consequently leading to the creation of employment opportunities. By fostering a conducive environment for investments, the deal would attract greater foreign direct investment (FDI) into India. The increased investment inflows have the potential to catalyse economic growth, stimulate industrial development.

One of the biggest advantages for India would be in technology transfer: Collaboration with EFTA member States could facilitate the transfer of advanced technologies and best practices to India. This transfer of knowledge and expertise has the potential of enhancing the skill sets of the Indian workforce, opening up employment avenues in high-value sectors. As SMEs constitute a significant portion of India’s economy, the expansion of their business operations would invariably lead to job creation at the grassroots. The provisions related to agricultural trade and market access could provide the much-needed stimulus to rural economy with emphasis on farming, agri-business and related industries. However, the successful implementation of the pact hinges on effective policy coordination, institutional capacity building and stakeholder engagement. Addressing logistical challenges, ensuring compliance with regulatory standards and promoting inclusive growth will be imperative to fully harness the benefits. Moreover, it is essential to monitor the socio-economic impacts of the agreement to ensure that the benefits are distributed equitably. Efforts should be made to mitigate any adverse effects on vulnerable groups and to promote sustainable and inclusive development.