Investment lessons from the India-EFTA trade agreement

India need a clear free trade agreement strategy, particularly in relation to international trade and foreign investment laws.  

Why does India need to revamp its Free Trade Agreement policy?

  • Regarding Comprehensive Economic Treaties: Combining trade and investment discussions gives India clear bargaining advantage to reach favourable agreements.
    • It enables India to leverage trade concessions for more investment, and vice versa. This method strengthens India’s negotiating position in FTA discussions.
  • For Scope Expansion: India should broaden the scope of investment concerns by include rules for safeguarding foreign investors under international law, therefore restoring their trust in investing in India.
    • It will assist India in establishing an effective dispute settlement framework under international law to address investment issues effectively.
    • Providing effective legal protection to international investors is critical for improving their trust, especially as India’s foreign direct investment levels decline. 
  • To counteract the downturn in FDI levels, the policy should encourage confidence in foreign investors through strong legal protection and dispute resolution systems.

Investment Lessons from the India-EFTA Trade Agreement:

  • The India-EFTA FTA has a thorough investment component, which is absent from recent Indian FTAs with countries such as Australia, the UAE, and Mauritius.
  • The agreement includes clauses for EFTA nations to make honest efforts to boost FDI to India and support job creation, codifying a requirement of behaviour rather than a result.
  • Economic theory emphasises the strong relationship between commerce and investment. Previous Indian FTAs featured both binding trade regulations and investment protection, while more recent ones separated international trade law from international investment law.
  • The India-EFTA FTA emphasises merging trade and investment discussions into a single complete economic pact, known as the ‘FTA 3.0 method’, which differs from the decoupling method used in prior FTAs. 


  • Improve Indian negotiators and officials’ understanding of complex trade and investment problems, including legal frameworks, dispute resolution procedures, and international best practices.
  • Integrated Negotiation strategy: Take an integrated strategy to FTA talks, negotiating trade and investment components concurrently inside a single agreement to ensure coherence and synergy between the two.

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