India signs free trade deal of $100bn with four European countries. Here's all you need to know.

It was on March 10 when India signed a trade agreement with the European Free Trade Association, an intergovernmental grouping of four nations, namely, Norway, Switzerland, Iceland, and Liechtenstein. A total of $100 billion in investment has been brought in by the deal in about 15 years.

The timing of the deal

This year, around 64 countries of the world along with are gearing into their respective elections. This can result in a pause in the free trade agreements for such countries and their trade partners. However, it is important to note that time is running super quick as the global supply chain will be going a reset with the investment.

Global investors view India as a top contender. However, there are many other good investment destinations emerging up for global investments. These include the North American countries like Mexico and the ASEAN countries led by Vietnam. Therefore, a delay in renewed attempts targeted at global integration may result in a missed opportunity in the geo-political sphere.

India actually runs a trade deficit with some of the leading trade partners, except the United States. This situation also holds true in the case of FTAs signed by India in the past, particularly with the ASEAN countries. The ASEAN FTA has aided the country to secure intermediate products. However, the country's growing average tariffs signify that the country's FTA partners hold better access to the market in the country post the tariff elimination.

What makes the India-EFTA deal important is the fact that it can also expectedly widen the trade gap. The legality of the $100 bn investment is still not clear by the EFTA. An investment like this could aid India ingenerating economic activity and employment in the country, in exchange of providing access to markets to the EFTA.

Additionally, India could get benefits in the services sector. Furthermore, the deal could aid India to power its services sector ahead.

What sectors will be benefited the most?

The deal could lead to an investment flow in the sectors of chemical, pharma, engineering, and food processing.