Swiss withdrawal of MFN standing to India will not have quick affect on commerce: Officers

New Delhi: Switzerland’s choice to droop essentially the most favoured nation (MFN) therapy for India underneath their double-taxation avoidance settlement (DTAA) from January 1 is unlikely to have any quick affect on commerce, officers stated.

Specialists have expressed apprehensions over the withdrawal of MFN impacting funding flows underneath the European Free Commerce Affiliation (EFTA).

India has the choice of remedial actions, resembling partial withdrawal of tariff concessions underneath the free commerce deal not too long ago inked with EFTA nations, if the bloc fails to satisfy its funding commitments.

EFTA consists of Iceland, Liechtenstein, Norway and Switzerland.

Switzerland Friday suspended MFN standing underneath its DTAA with India, in what may elevate the tax outgo for Indian entities working there.

India’s exports to the EFTA bloc in April-September FY25 have been $1 billion and imports have been $10.7 billion.

The Commerce and Financial Partnership Settlement (TEPA) features a binding dedication of $100 billion funding and the creation of 1 million direct jobs in India by firms from these 4 international locations over the following 15 years. Such an funding dedication is a primary for India. “The settlement gives for momentary remedial measures if the EFTA members do not fulfil their funding dedication however it is a measure that can be utilized in the long term,” stated an official. India has promised to scale back tariffs to zero on 80-85% of products from EFTA international locations whereas receiving duty-free market entry for nearly 99% items together with rice. Round 82% of India’s import from the 4 international locations, particularly from Switzerland, is gold however it has refused to scale back efficient tariffs on gold, jewelry, dairy, cheese and vehicles.

The EFTA nations have dedicated $50 billion inside 10 years and a further $50 billion within the subsequent 5 years. For the overseas direct funding (FDI) to materialise, India’s nominal gross home product must develop round 9.5% in greenback phrases over the following 15 years. The investments don’t cowl overseas portfolio investments.

Nonetheless, commerce consultants stated Switzerland’s choice highlights broader points in India’s strategy to MFN clauses in bilateral treaties.