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  2. Economic and Social Development

India-EFTA Trade Agreement Success

Published on: 01-Oct-2026

Source: The Hindu

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India-EFTA Trade Agreement Success

Article Summary

Trade and Economic Partnership Agreement (TEPA) - India and EFTA

Overview

  • Effective Date: October 1, 2025.
  • Parties Involved: India and four European Free Trade Association (EFTA) states: Iceland, Liechtenstein, Norway, and Switzerland.
  • Purpose: Strengthen trade relations and foster investment.

Key Terms of Agreement

  • Tariff Concessions:
    • EFTA states: Concessions on 92.2% of tariff lines, covering 99.6% of India's exports.
    • India: Concessions on 82.7% of tariff lines, covering 95.3% of EFTA's exports.

Investment and Job Creation Targets

  • Investment Target: $100 billion from EFTA states in India over 15 years.
  • Job Creation Aim: Facilitate one million direct jobs.

Areas of Focus and Cooperation

  1. Geothermal Energy:

    • Direct Use: Experience from Iceland in using low- to medium-temperature geothermal energy, such as heating homes and agricultural processes, to be adapted in India.
    • Example Project: Geothermal facility in Kinnaur district, Himachal Pradesh, enabling farmers to dry fruit, improving storage and sales timing.
  2. Carbon Capture, Utilisation and Storage (CCUS):

    • Potential: NITI Aayog study (2022) estimates India could capture 750 million tonnes of CO2 annually by 2050.
    • Government Support: ₹20,000 crore allocated in Union Budget for CCUS technology development over five years.
    • International Collaboration: Projects with Iceland involve knowledge sharing and technology licensing for e-methanol production at JSW Steel in Maharashtra.
  3. Sustainable Fisheries Management:

    • Learning from Iceland: Expertise in maximizing use of fish resources (up to 90% utilization) to enhance value in Indian fisheries without increased catch.
    • Potential Collaboration: Icelandic companies exploring processing North Atlantic fish catches in India.

International Relations Framework

  • Arctic Engagement:
    • Iceland: Founding member of the Arctic Council.
    • India: Observer since 2013; published its Arctic Policy in 2022.
    • Collaboration focused on energy, trade, and shared stewardship of the Arctic region.

Conclusion

  • The TEPA serves as a forward-looking model of Europe-India trade partnerships, complementing ongoing discussions such as the EU-India Free Trade Agreement (FTA). It aims to enhance investment, technology transfer, and develop a mutual framework for sustainability and job creation.

Economic Data & Indicators

  • Investment Objectives: $100 billion investment, 1 million jobs.
  • Budget Allocation: ₹20,000 crore for CCUS development.

Constitutional and Policy References

  • Emphasis on economic development aligns with the Directive Principles of State Policy (DPSP) aimed at ensuring economic growth and job creation in the Constitution of India.

Environmental and Technological Implications

  • Focus on sustainable practices in energy and fisheries to align with global environmental goals.
  • Long-term technological collaborations expected to enhance capabilities in carbon management and energy security.

Key Terms & Concepts

Trade and Economic Partnership Agreement (TEPA)First trade agreement with investment chapter
EFTAGroup of trade partner states
IcelandContributed geothermal energy expertise
NITI Aayog studyForecasts carbon capture potential
₹20,000 croreUnion Budget allocation for CCUS
Carbon Recycling International’s George Olah plantFirst industrial-scale CO2 to fuel plant
Arctic CouncilGovernance body Iceland belongs to
Himadri research stationIndia's Arctic research facility
1 millionTarget direct jobs from TEPA
15 yearsTimeframe for $100 billion investment

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    17.9%
  • The number of projects sanctioned rose from 907 in FY25 to 1,032 in FY26.
  • Investment Sources:

    • Of the total project costs, approximately 55% (Rs 2.4 lakh crore) was financed directly by banks and financial institutions.
    • Beyond the banks' financing, 509 private non-financial companies raised about Rs 1 lakh crore through external commercial borrowings (ECBs) and 298 companies raised Rs 23,809 crore via domestic equity issuances in FY26.
  • Investment Intentions:

    • A total of 1,839 projects involving Rs 5.6 lakh crore were recorded for FY26, representing increases of 16% in project numbers and 12% in investment values compared to FY25.
  • Project Size Dynamics:

    • Smaller projects (less than Rs 100 crore) continued to dominate the numbers, yet larger projects (Rs 5,000 crore and above) significantly influenced the total project cost.
    • The post-Covid period showed an increase in the number of larger projects.
  • Outlook:

    • The RBI forecasts a healthy investment outlook for 2026-27, suggesting that the private-sector investment cycle is anticipated to gather momentum, potentially influenced by bank financing, ECBs, and equity market activities.
  • Key Takeaways:

    • Significant growth and changes in project sanctioning dynamics reflect a strengthening investment cycle in India.
    • Continuous monitoring of state-level investment trends and funding channels will be crucial to understanding the economic landscape and the trajectory of corporate investments moving forward.