MFN Status Suspension Won’t Delay India-EFTA Trade Pact, Clarifies Switzerland

Switzerland said its decision to suspend the most favoured nation clause in the Double Taxation Avoidance Agreement will not delay the trade agreement that India recently signed with the European Free Trade Association bloc.

India and the four-nation EFTA bloc had signed the pact, officially dubbed as Trade and Economic Partnership Agreement, in March. The EFTA—consisting of four European countries—includes Iceland, Liechtenstein, Norway, as well as Switzerland.

Switzerland is the largest trading partner of India, followed by Norway in the bloc.

“No, the decision will not delay the ratification and implementation of EFTA-India TEPA,” the PTI quoted the Switzerland embassy in India as saying, in response to a query.

It added that the decision to remove MFN status will not negatively affect investments from Switzerland to India.

Recently, the Swiss government had suspended the most favoured nation status with India. There was fear that it could potentially impact the European nation's investments in India and lead to higher taxes on Indian companies operating there.

“The current suspension from the Swiss side of the application of the MFN clause under the protocol to the double taxation agreement between Switzerland and India does neither affect trade ties between the two countries nor Swiss investments in India,” the embassy added.

While the agreement is yet to be implemented, under the pact, India received an investment commitment of $100 billion over a span of 15 years from the grouping. The deal also involves allowing imports of several products like Swiss watches, chocolates, and cut and polished diamonds at lower or zero duties.

The $100-billion investment will be done in parts. While $50 billion will be invested within 10 years after the implementation of the agreement, the other $50 billion will come over the next five years, The funds would facilitate creation of one million direct jobs in India. This is a first-of-its-kind pledge agreed upon in any of the trade deals signed by India so far.

With PTI inputs