India’s $100 billion European Free Trade Association cheque is slow to clear as Vietnam joins the club

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India’s $100 bn EFTA goal gets a new neighbour in Vietnam

EFTA comprises Switzerland, Norway, Iceland and Liechtenstein, which are not EU members. The agreement was signed in Hanoi by senior representatives of the four EFTA states, including Swiss President Guy Parmelin, and by Vietnam's Minister of Industry and Trade Le Manh Hung, according to an EFTA document. Its entry into force is pending, the document said.

Bilateral trade between EFTA and Vietnam was EUR 4.8 billion in 2025, with a surplus of EUR 2.5 billion in Vietnam's favour, up from EUR 0.5 billion a decade earlier, according to EFTA. Electrical machinery, footwear and apparel, and mechanical machinery were the top imports from Vietnam.

India's Trade and Economic Partnership Agreement (TEPA) with EFTA was signed on March 10, 2024, and came into force on October 1, 2025. EFTA offered market access on 92.2% of its tariff lines, covering 99.6% of India's exports. India opened 82.7% of its tariff lines, covering 95.3% of EFTA's exports, according to the Press Information Bureau (PIB).

The two countries stand at different points with the two European blocs. Vietnam's EU pact has been in force since August 1, 2020, while its EFTA deal awaits entry into force, according to the European Commission and EFTA. India's EFTA pact took effect on October 1, 2025, and its EU pact was concluded on January 27, 2026, they said.

Experts differ on what it means for Indian exporters.

"Government and the businesses have to tighten their belts to ensure that India can compete in the EFTA markets, especially after Vietnam's FTA with this grouping," said Biswajit Dhar, development economist and former professor at Jawaharlal Nehru University.

Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), said the deal will not affect India's exports. "EFTA countries levy zero tariffs on industrial products, so deal with Vietnam or any other country including India offers no additional tariff advantage in these markets," he said. Competition will depend on product quality, price and delivery reliability, he said.

Normal route or FTA route

EFTA's free trade dashboard says Iceland and Norway abolished tariffs on most industrial imports on their own, and Switzerland and Liechtenstein did so from January 1, 2024.

Preferences under an FTA are not automatic, the dashboard says. Importers must claim them, and goods must meet the agreement's rules of origin. It calculates preference utilisation only on the subset of trade where a preferential margin exists. Its data covers 2018 to 2024, before India's pact took effect.

India's exports to EFTA

Dhar said Vietnam's duty-free access to EFTA countries poses a significant challenge to India's ambition of increasing its presence there. He said Indian exporters have struggled to use the market access opportunities since the agreement was signed. Exports fell nearly 11% in 2025-26 and by over 9% in January to July 2026 over 2025, he said.

The Commerce Ministry said in May that India's exports to Switzerland, its largest EFTA partner, crossed $1.2 billion in 2025-26.

Products that overlap

India's exports to EFTA in 2024-25 included engineering goods worth $315 million, up 18% from the year before, according to the PIB. Dhar said telephones and electronics products, and textiles and clothing, have been among Vietnam's major exports to EFTA in recent years, and that India has considerable competitive strengths in these industries.

The European Union angle

EU-Vietnam goods trade was EUR 76 billion in 2025, and the EU's deficit was EUR 51.7 billion, according to the Commission. Machinery and appliances made up more than half of EU imports from Vietnam, followed by footwear and textiles.

On September 11, the Commission sent proposals to the EU Council seeking authorisation to sign and conclude the India deal.

India's Commerce Ministry put India's goods exports to the EU at $75.85 billion in 2024-25. It said $33 billion of India's labour-intensive exports, including textiles and leather and footwear, face EU duties of 4% to 26% and will move to zero at entry into force. It valued India's textile and apparel exports to the EU at $7.2 billion.

The $100 billion investment goal

Under Article 7.1(3) of TEPA, the EFTA states "shall aim to increase" foreign direct investment into India by $50 billion within 10 years of the agreement taking effect, and by another $50 billion in the following five years, according to the agreement text.

The PIB describes the commitments as binding. Under Article 7.7, a sub-committee will review progress at five, 10 and 15 years. If the objectives are not met by the final review, India can seek consultations and, if they fail, take temporary measures to rebalance its tariff concessions, the text says.

Srivastava described the commitment as "just an aspirational target tied to India's high GDP growth and high returns to EFTA companies in India." Dhar said: "These are still early days to assess whether there has been any forward movement on this promise."

Data from the Department for Promotion of Industry and Internal Trade (DPIIT) show cumulative FDI equity inflow from Switzerland, the largest EFTA source of investment in India, at $11.32 billion from April 2000 to March 2026. It was $10.88 billion up to June 2025, a rise of about $440 million.