Trade experts said the remedial measure of withdrawing tariff concessions could be difficult to implement since it’s the private sector from the four-nation bloc, not the government, that will invest in India and there is no concrete legal obligation on what qualifies as investment promotion. But government officials say tariff certainty is necessary to attract investments and build confidence among private investors.

“Purely from a conceptual standpoint, linking of trade preferences (i.e., tariff concessions), to the realisation of projected investments, is a good starting point. It has as its basis the fundamental question — has this trade agreement lived up to its stated objective? But, the nitty-gritties of the legal text are open-ended and broadly worded, and hedged with several caveats. From a practical standpoint, enforcement of obligations under such a chapter would be difficult. It is entirely left to each party’s good faith implementation,” said R V Anuradha, Partner at Clarus Law Associates.

Queries mailed to the Department of Commerce and Industries remained unanswered till press time.

A government official, requesting anonymity, said EFTA “is reaching out to the companies” and that they had “extensive consultations with the private companies before arriving at the investment amount”.

“The investment cannot come in without tariff certainty. Commitment made is for foreign direct investment and not from the sovereign wealth fund, which falls under foreign portfolio investment. The portfolio investment is fickle in nature but not FDI,” the official said.

The fine print of the deal stated that India has agreed to give tariff concessions to about 95% of the goods coming in from the EFTA countries in a staggered manner including a marginal concession on gold, the biggest import item from EFTA. There will be a longer duration for elimination of tariffs in sectors where India has a production-linked incentive scheme in place.

The ‘Remedial Measures’ Article 7.8 in the pact states that India can undertake “temporary” and proportionate remedial measures to “rebalance the concessions” given to the EFTA countries in the Schedule of Commitments under the Chapter on Trade in Goods. But the measures can be taken only after the grace period which is defined as “additional 3 years”. The grace period begins after 15 years of the deal coming into effect.

The footnotes in the chapter on cooperation also clarify that sovereign wealth funds are excluded from the promotion obligations undertaken by the EFTA countries and that “technology collaboration” does not require “technology transfer”. Technology collaboration would include promoting cooperation between centres of excellence and dialogue, among others.

“The $100-billion investment commitment is an oversell because investments in the last two decades from EFTA countries come in at $10 billion dollars. So how will the projected investment happen? It is natural for the government to bite the bullet because private investments are a problem and FDI is also not picking up,” said Biswajit Dhar, Professor at Jawaharlal Nehru University’s Centre for Economic Studies and Planning.

He said there is no link between investment and trade. “FDI in India did not happen because of tariff liberalisation. We are still very conservative on tariff liberalisation. There are other issues that determine FDI. Investors are looking for transparency. They are looking for better logistics. For instance, ports are a major sticking point. We are still talking about turnaround in terms of days and our competitors are talking in terms of hours.”

India’s compound annual growth rate between 2019-20 to 2023-24 is estimated at 4.1 per cent. The growth between 2014-15 and 2018-19 stood at 7.4 per cent. The Reserve Bank of India has projected a 7 per cent growth rate for the Indian economy in 2024-25.