New Trade Pact Between India and EFTA: No Immediate Tariff Cuts for Swiss Watches, Wines, Chocolates

The recently established trade and economic partnership between India and the European Free Trade Association (EFTA) is poised to reshape bilateral trade dynamics. However, immediate changes in tariff structures, particularly concerning sought-after Swiss goods like high-end watches, chocolates, and wines, are not anticipated as part of the initial agreement.

While the negotiations have resulted in some adjustments to duty rates, the full impact of these concessions will only materialize over an extended period. For instance, while there is no immediate duty concession on Swiss gold, slight reductions in bound duty rates from 40% to 39% under the Trade and Economic Partnership Agreement (TEPA) have been noted. Yet, considering the effective rates in India are currently at 15%, significant relief in this area remains elusive.

An analysis conducted by Ajay Srivastava, the founder of the Global Trade Research Initiative, indicates that various product categories such as watches, clocks, cocoa bean and powder, malt products, tuna, trout, and olive oil will witness a gradual reduction in tariffs, eventually reaching zero over a span of seven years under the TEPA.

Beyond tangible goods, the agreement underscores the importance of the services sector, aiming to enhance service exports across diverse industries such as information technology, business services, education, healthcare, and audio-visual services. Commerce and Industry Minister Piyush Goyal has emphasized the improved commitments and certainty for the entry and temporary stay of key personnel from EFTA countries, facilitating smoother movements of Indian professionals across borders.

Branded products synonymous with Swiss craftsmanship, including Rolex, Hublot, Blancpain, Omega, Breguet, Lindt, Toblerone, Merlot, Pinot Noir, and Chardonnay, are expected to maintain their pricing levels in India for the foreseeable future. However, the gradual reduction in duties on select products like chocolate, coffee, olives, avocado, apricot, and caramel may take up to a decade to be fully realized.

Regarding wines, duty reductions will be tiered based on price range. While wines priced under $5 per 750 ml bottle will receive no immediate concession, those priced between $5 to $15 will experience a reduction from 150% to 100% in the first year, gradually declining to 50% over the next decade. Wines priced above $15 will witness a reduction from 150% to 75% in the first year, eventually settling at 25% by the tenth year.

Despite these concessions, certain items such as coal (excluding steam and coking coal), medicines, dyes, most textiles and apparels, and iron and steel products will see immediate duty cuts to zero. Additionally, the services sector stands to benefit from enhanced access through digital service delivery and expanded commercial presence under the TEPA.

Furthermore, the agreement includes provisions for Mutual Recognition Agreements (MRA) in professional services like nursing, chartered accountancy, and architecture. These MRAs will enable the recognition of professional qualifications across participating countries, facilitating seamless cross-border employment opportunities for qualified professionals.

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