India-EFTA pact: India to phase out import duties on chocolates, watches, textiles, smartphones

Duties on substantial number of goods imported from EFTA countries–Switzerland, Norway, Iceland and Liechtenstein–including  chocolates, watches, smartphones, olive oil, corn flakes, machinery, textiles, medicines, cod liver oil, tuna, trout and salmon, will be phased out by India under the India-EFTA Trade and Economic Partnership Agreement signed on Sunday.

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“India is offering 82.7 per cent of its tariff lines which covers 95.3 per cent of EFTA exports of which more than 80 per cent import is gold. The effective duty on gold remains untouched. Sensitivity related to PLI in sectors such as pharmaceuticals, medical devices and processed food have been taken into account while extending offers,” per a statement released by the Commerce Department.

Sectors such as dairy, soya, coal and sensitive agricultural products are kept in exclusion list, it added.

The items on which tariffs will become zero immediately on entry into force of the FTA include coal (except steam and coking coal), most medicines, dyes, most textiles and apparels and iron and steel products, according to an analysis carried out by research body Global Trade Research Initiative.

Tariffs on cod liver oil and fish body oil will be eliminated in five years time while those on tuna, trout, salmon, olive oil, cocoa bean, powder, malt products, corn flakes, instant tea, roasted chicory, most machinery, bicycle parts, clock and watches will be eliminated in seven years.

Phasing out of import duties on smartphones, chocolates, medical equipment (most), chocolate, caramel, coffee, avocado, apricot and olives will happen over ten years. 

Some of the duty cut offers are exclusive to Switzerland as it is by far the largest trade partner amongst the EFTA countries. Concessions for some agriculture items have been made based on specific requests.

Duty cuts on wines from Switzerland will be mostly at par with concessions extended to Australia under the Australia-India Economic Cooperation and Trade Agreement, the GTRI report said. There will be no import duty reduction on wine bottles priced lower than $5. For bottles priced between $5 and $15, duty cut in first year will be to 100 per cent from 150 per cent. Duties will subsequently be reduced to 50 per cent in ten equal yearly instalments. 

For wine bottles priced at $15 or more, duty cut in the first year will be to 75 per cent from 150 per cent. Duties will finally be brought down to 25 per cent over ten years with yearly reduction in ten equal instalments.

India has also committed to a 50 per cent tariff reduction in sugar in 10 years and a 50 per cent tariff reduction for cut and polished diamonds, to 2.5 per cent, in five years, the GTRI analysis noted.

As much as 98 per cent of India’s exports to Switzerland (market accounting for 70 per cent of India’s exports to EFTA) are industrial products and they will now be imported duty-free, the GTRI report said. “However, this doesn’t create new market opportunities since these products were already entering Switzerland without duty under the Most Favoured Nation (MFN) status,” it added.

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The remaining 2 per cent of exports are agricultural products. “Switzerland has excluded most agricultural items such as dairy products, honey, various vegetables, wheat, maize flour and cane sugar from these concessions,” it said.