The European Free Trade Association (EFTA) members are Iceland, Liechtenstein, Norway, and Switzerland.
Credit: X/@PiyushGoyal
New Delhi: India has received a foreign direct investment commitment of $100 billion for 15 years from the four-European nation bloc - EFTA under a free trade agreement signed between the two sides on Sunday.
The European Free Trade Association (EFTA) members are Iceland, Liechtenstein, Norway, and Switzerland.
Under the Trade and Economic Partnership Agreement (TEPA), an investment commitment of $50 billion has been made for the first ten years after the implementation of the agreement and another $50 billion over the next five years from the member countries of the bloc and to facilitate the generation of 1 million direct employment in India through such investments.
An official said that there is a provision in the agreement that if the proposed investments would not come because of some reasons, India can 're-balance or suspend' the duty concessions to the EFTA countries.
"EFTA has committed to promote investments with the aim to increase the stock of foreign direct investments by $100 billion in India in the next 15 years," the commerce ministry said.
The investments do not cover foreign portfolio investment.
"For the first ever time in the history of FTAs, a legal commitment is being made about promoting target-oriented investment and creation of jobs," it added.
According to the agreement documents, in view of promotion activities for investments into India, India would endeavour to ensure a favourable climate for FDI, while taking into account the need to identify, assess and mitigate potential risks for security or public order.
Briefing media after inking the agreement, Commerce and Industry Minister Piyush Goyal said that the fast-growing Indian economy, the expectation of addition of about $30 trillion to the national GDP in less than 30 years, skilled workforce and demographic dividend provides a 'very' compelling opportunity for EFTA businesses to invest in India.
'When we calculated the growth potential of FDI in the next 15 years, we recognise that with the compounding growth that India is offering...we can easily target and look for $100 billion investments in the next 15 years,' he said.
The investment commitment is from the private sector of EFTA nations.
The minister explained that the commitment has come after a huge engagement.
"They have actually drawn up a list of major sectors which will be looking into investing in India, they have talked to their companies, they have a list of sectors and the major companies who are looking at large investments and therefore it is a very scientific way of discovering the number," Goyal said.
It is not as if the number was arrived 'out of the hand', he said adding initially the number started from $10-15 billion but as both sides widened their discussions with the industry, as 'we looked' and engaged with domestic pharma industry, renewable energy, industry related to green economy, studied the industry profile of the four countries and India's demand projection into the future, 'this whole number evolved'.
The minister said that many sectors will benefit from this investment such as pharma, machinery, chemicals, dyes, and certain engineering goods.
It will also reduce India's import dependency significantly while attracting investments.
When asked about the mechanism to track this investment commitment, Goyal said an agreement rests on the platform of trust and the pact provides for the necessary tools to ensure that investments come in.
"What will be the effect if the investment doesn't come in and what will be the effect if growth is not to the slated level that we have projected, all of those are addressed in the agreement," he said.
"If that growth and certainty is maintained, we have absolutely no doubt that the agreement will lead to investment flows, possibly larger than what we have estimated," Goyal said.
If it does not come, the two sides have created a 'very' robust mechanism where 'we will mutually work out how that would be handled and what would be the steps taken in case there is any shortfall in investments,' he said.
Commerce Secretary Sunil Barthwal said that there will be a business forum which will discuss how to spur investments how to 'nudge' businesses, and how they can make investment plans.
"It is not based on some kind of wish list, it is based on certain firm commitments...we are very sure that these projections will come true," Barthwal said.
India has received about $10 billion in foreign direct investments (FDI) from Switzerland between April 2000 and December 2023. It is the 12th largest investor in India.
The FDI inflow was $721.52 million from Norway, $29.26 million from Iceland and $105.22 million from Liechtenstein during the period.