The EFTA-India agreement enters into force: what businesses need to know

Reduction of customs duties

The agreement provides for the elimination or reduction of customs duties on about 95% of Swiss exports of industrial products to India. However, this liberalization will not apply immediately to all products. Some HS (Harmonized System) codes will benefit from an immediate reduction, while others will see their customs duties progressively reduced over a period of 5 to 10 years. It is therefore essential to check the specific HS code for each product to determine the applicable timeline.

Rules of origin

In order to benefit from the tariff preferences provided for in the free trade agreement, exporters must respect the rules of origin set out in the agreement, which means that products must meet specific criteria for origin and processing.

For exports to India, two types of proof of origin are possible or required:

• a movement certificate EUR.1, or
• a declaration of origin on the invoice with an electronic signature. The declaration of origin may only be made by an Approved Exporter (AE).

You can check our India checklist here: Checklist of formalities for export to India | S-GE

Points to note: Not all products will benefit immediately from the tariff reductions. Implementation will take place gradually over several years.

More information: EFTA-India – Appendix 2.C.3 – IN Schedule of Tariff Commitments on Goods to CH.xlsx

Meaning of the “market access offer” (non-exhaustive list):

• EIF: Customs duties are eliminated on the date of entry into force of the agreement.
• E5: Customs duties are eliminated in five equal annual instalments from the date of entry into force of the agreement; the goods are duty-free from 1 January of year 5.
• E7: Customs duties are eliminated in seven equal annual instalments from the date of entry into force of the agreement; the goods are duty-free from 1 January of year 7.
• E10: Customs duties are eliminated in ten equal annual instalments from the date of entry into force of the agreement; the goods are duty-free from 1 January of year 10.
• Exclusion: Products are excluded from any obligation to reduce or eliminate customs duties.

The full agreement is available here: India | European Free Trade Association

To explain a little more clearly what is meant by “annual installments”: in the EFTA-India free trade agreement, some products do not have their customs duties eliminated immediately, but gradually over several years.

E7:

1. Customs duties on this product will be reduced in 7 equal annual installments from the date of entry into force of the agreement.
2. Each year, the customs duty is reduced by 1/7th of the original tariff.
3. From January 1st of the 7th year, the elimination is complete: There are no more customs duties.

Example E7:

• Initial tariff: 10%
• Year 1: 10% - 1/7 = ~8.57%
• Year 2: ~7.14%
• …
• Year 7: 0% (duties eliminated) – January 1, 2031

In summary, the bigger the number after “E”, the longer the phase-out period.

 

The EFTA-India Agreement requires that the declaration of origin on invoice be signed electronically if it is transmitted in digital form.

The steps are as follows:

• Qualified electronic signature: Equivalent to a handwritten signature under Swiss law, it must be issued through a recognized provider.
• Recommended PDF format: The commercial invoice with the declaration of origin must be electronically signed in PDF format.
• A recognized certification service must be used for the electronic signature.

Text of the agreement: Paragraphs 16–19 of Appendix 2.A specify that the electronic signature must allow verification of the identity of the signatory and guarantee the integrity of the document.