India-EFTA trade pact: Swiss watches, chocolates to get cheaper

Domestic customers will get access to high-quality Swiss products such as watches, chocolates, biscuits and clocks at lower prices as India will phase out customs duties under its trade pact with the EFTA bloc on these goods over a period of time.

India and the four-European nation bloc EFTA signed a trade and economic partnership agreement (TEPA) on Sunday to boost trade and investments between the two regions.

The European Free Trade Association (EFTA) members are Iceland, Liechtenstein, Norway, and Switzerland.

It will take up to a year to implement the agreement due to an elaborate ratification process of these pacts in different countries.

"We are giving duty concessions on Swiss watches, and chocolates," an official said. Some famous Swiss watch brands are Rolex, Omega, and Cartier.

Nestle, which is a Swiss brand, is a major player in the Indian FMCG industry and manufactures chocolates in India. It is the third-largest listed entity in the Indian FMCG segment.

According to an analysis of the TEPA documents by economic think tank Global Trade Research Initiative (GTRI), India has allowed tariff concession to several products imported from Switzerland under the agreement.

"India will soon have access to high-quality Swiss products at lower prices because it has decided to remove tariffs on many Swiss goods over seven to ten years," GTRI Founder Ajay Srivastava said.

The GTRI said that after the implementation of the agreement, tariffs or duties would become zero for Swiss goods like coal except steam and coking coal, most medicines, and dyes.

"Tariff to be reduced to zero in 5 years are Cod liver oil, Fish body oil; and duties over which India would eliminate the customs duties in 7 years are Tuna, Trout, salmon, Olive oil, Cocoa bean, powder, Malt products, corn flakes, Instant tea, Roasted chicory, Most machinery, Bicycle parts, Clock, watches," the GTRI analysis said.

It added that items such as smartphones, Olives, Avocado, Apricot, Coffee, capsules, mate, Hop cones, Caramel, Chocolate, products, Medical equipment (most) would see duty elimination in ten years.

"Tariff reductions are there on sugar - 50 per cent in 10 years; and on Cut and polished diamonds - reduction to 2.5 per cent (50 per cent duty in 5 years)," the analysis said.

For wines, it said duty concessions are similar to those given to Australia, with no concessions for wines costing less than USD 5.

"Wines priced between USD 5 and less than USD 15 will see a duty reduction from 150 per cent to 100 per cent in the first year, then decreasing gradually to 50 per cent over 10 years," Srivastava said.

For wines costing USD 15 or more, he said, the initial duty cut is from 150 per cent to 75 per cent, eventually reducing to 25 per cent after 10 years.

India-EFTA two-way trade was USD 18.65 billion in 2022-23 as compared to USD 27.23 billion in 2021-22.

Switzerland is the largest trading partner of India followed by Norway.

The bilateral trade between India and Switzerland stood at USD 17.14 billion (USD 1.34 billion exports and USD 15.79 billion imports) in the last fiscal. In 2022-23, India's trade deficit with Switzerland was USD 14.45 billion.

India's main imports from Switzerland include gold (USD 12.6 billion), machinery (USD 409 million), pharmaceuticals (USD 309 million), coking and steam coal (USD 380 million), optical instruments and orthopaedic appliances (USD 296 million), watches (USD 211.4 million), soybean oil (USD 202 million), and chocolates (USD 7 million).

Major exports from India include chemicals, gems and jewellery, shops and boats, machinery, certain types of textiles and apparel.

Switzerland is the largest source of gold imports for India, with about 41 per cent share during April-October this fiscal, followed by the UAE (about 13 per cent) and South Africa (about 10 per cent). The precious metal accounts for over 5 per cent of the country's total imports.

Switzerland has some of the major pharma firms in the world including Novartis and Roche. Both firms have a presence in India.

Further the GTRI said that 98 products of India's exports to Switzerland are industrial products, and they will now be imported duty-free.

However, this does not create new market opportunities since these products were already entering Switzerland without duty under the Most Favored Nation (MFN) status.

"The remaining 2 per cent of exports are agricultural products.

Switzerland has excluded most agricultural items such as dairy products, honey, various vegetables, and wheat, maize flour, and cane sugar from these concessions," it said.