Gold accounts for about 80 per cent of India's imports from Switzerland.
Credit: PTI File Photo
New Delhi: India may give quota-based duty concession on gold imports from Switzerland under the proposed free trade agreement with the four European nation bloc EFTA, sources said.
The European Free Trade Association (EFTA) members are Iceland, Liechtenstein, Norway, and Switzerland.
Sources also said that India has sought an investment commitment of $50 billion during 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.
Import duty concession on gold was a major demand of Switzerland from India in the agreement. Gold accounts for about 80 per cent of India's imports from Switzerland.
New Delhi has extended 1 per cent duty concession to domestic importers on a specified quantity of gold under TRQ (tariff rate quota) in a trade pact with the UAE.
"Similar duty concessions are also being worked out under the EFTA agreement," one of the sources said.
An email query to the commerce ministry on the issue did not elicit any comment.
At present, a 12.5 per cent basic customs duty and a 2.5 per cent cess are imposed on gold imports. Gold imports rose by 30 per cent to about USD 38 billion during April-January 2023-24.
The investment commitment would help India balance Switzerland's decision to remove customs duties on most of its industrial goods, one of the sources said.
Indian negotiators are also trying to see how the Swiss companies can come and manufacture in India so that it gives a boost to Make in India programme and also helps in raising the domestic manufacturing power.
Switzerland is the largest source of gold imports, 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 large historical accumulations of gold and it primarily refines imported gold.
In 2022-23, India's imports from Switzerland stood at $15.79 billion, in stark contrast to its exports of $1.34 billion, leading to a substantial trade deficit of $14.45 billion.
India received about $10 billion in foreign direct investments from Switzerland during April 2000 and December 2023.
India and EFTA have been negotiating the pact, officially dubbed as Trade and Economic Partnership Agreement (TEPA), since January 2008 to boost economic ties.
The agreement has several chapters including trade in goods, rules of origin, intellectual property rights (IPRs), trade in services, investment promotion and cooperation, trade and sustainable development, and trade facilitation.
EFTA has 29 free trade agreements (FTAs) with 40 partner countries, including Canada, Chile, China, Mexico, and Korea.
Under free trade pacts, two trading partners significantly reduce or eliminate customs duties on the maximum number of goods traded between them, besides easing norms to promote trade in services and investments.
EFTA countries are not part of the European Union (EU). It is an inter-governmental organisation for the promotion and intensification of free trade. It was founded as an alternative for states that did not wish to join the European community.
India's exports to EFTA countries during 2022-23 stood at $1.92 billion against $1.74 billion in 2021-22. Imports aggregated at $16.74 billion during the last fiscal compared to $25.5 billion in 2021-22.
The trade gap is in favour of the EFTA group, according to the commerce ministry data.