India and the European Free Trade Association (EFTA) group of nations — Iceland, Liechtenstein, Norway and Switzerland – are set to sign a free trade agreement (FTA) on Sunday, which will be the third major trade deal of the Narendra Modi government since early 2022, when New Delhi signed separate bilateral agreements with the United Arab Emirates (UAE) and Australia.

Read here: EFTA hopeful of finalising India trade deal in ‘days or weeks’: Norway minister

A formal signing ceremony is expected on Sunday morning in New Delhi, which will be attended by senior officials of India and four EFTA countries, people aware of the development said requesting anonymity. Talks on the India-EFTA deal began in January 2008 but remained dormant since 2013 until they were revived last year.

“It is a win-win deal for both parties as they have taken care of sensitivities of each other. It is also very significant in the sense that it will be the first FTA with any European entities,” one of the people with direct knowledge of the matter said. The UK and the EU are also engaged with New Delhi to forge bilateral deals, but it is unlikely before the general elections in India, he said. The Election Commission may announce polling dates next week.

“The Trade and Economic Partnership Agreement (TEPA) between India and EFTA covers wide-ranging matters such as trade in goods and services, rules of origin, intellectual property rights (IPR), investment promotion, trade facilitation and sustainable development,” a second person said. TEPA is expected to help India bridge a huge gap in the balance of trade, which is in favour of the European nations, particularly Switzerland, he added. In 2023, India’s trade deficit with the EFTA states was more than $18.57 billion mainly on account of gold imports.

According to government data, India’s exports to the EFTA region during January-December 2023 was $1.87 billion, while its imports from the bloc of countries that aren’t members of the EU was in access of $20.45 billion, with Switzerland’s share alone pegged at $19.65 billion due to gold purchases.

In the case of gold imports, India may allow a quota-based concessional duty regime for EFTA states on the lines of an existing arrangement with the UAE.

Read here: India, EFTA wait to unveil free trade agreement

India’s key imports from the four countries are gold ($20.7 billion in 2021-22), silver, coal, pharmaceuticals, vegetable oil, dairy machinery, medical items, crude and scientific equipment. It exports chemicals, iron and steel, gold, precious stones, yarns, sports goods, glassware and bulk drugs to these nations.