Navigating India–EFTA TEPA

Before TEPA, EFTA-India trade faced challenges due to duties and frictions that increased costs and extended timelines. With TEPA, India will gradually reduce or eliminate 82.7% of tariff lines, making 95.3% of EFTA exports to India more affordable over a phased period of up to ten years. Swiss companies in industries such as:

• Machine, Electrical Engineering & Metals (MEM) and precision
• Chemicals
• Pharmaceuticals
• MedTech/HealthTech
• Watches
• Food & Beverages
• IT, Telecom and Software
• Banking, Financial Services and Insurance (BFSI)
• Logistics

stand to benefit from TEPA over time.

Beyond market access, EFTA has committed USD 100 billion in investment over fifteen years, aiming to create one million direct jobs—an unprecedented feature in an Indian trade agreement. This framework seeks to transform tariff relief into factories, capability centers, and sustainable supply chains.

In early October 2025, a delegation of Swiss companies from Vaud visited Mumbai and Hyderabad to explore TEPA opportunities. Their presence highlighted India's interest in Swiss expertise in engineering, precision manufacturing, sustainability, clean technologies, advanced manufacturing, automation, medical devices, and healthcare innovation—showing TEPA is not just an agreement on paper but a catalyst for real-world commercial engagement.

TEPA's investment component aligns with India's priorities: scaling domestic manufacturing, encouraging technology transfer, and accelerating greener growth. For Swiss firms, this means a supportive environment for establishing or expanding manufacturing, R&D hubs, and services operations, potentially alongside Indian incentives. The agreement includes cooperation mechanisms to address potential investment slowdowns, reflecting a collaborative approach.

Tariff rationalisation is meaningful only if it leads to price competitiveness and market pull. Under TEPA's phased schedules, Swiss (and EFTA) exporters gain:

• Stronger pricing power in precision engineering and MedTech as duties on watches, diagnostics, and high-end devices fall.
• Improved margins in premium food categories as chocolates and processed foods become more affordable.
• Reduced frictions for machinery and select pharmaceutical inputs, supporting India's manufacturing growth and lowering total cost of ownership for end users.

The practical payoff is a tighter landed-cost equation and a clearer path to volume in urban centers and industrial clusters where demand is growing fastest. TEPA's benefits are phased over time, with some cuts and commitments taking effect immediately and many tariff reductions scheduled over 5–10 years (e.g., watches over seven years; several chemical and automotive lines over 7–10 years).

TEPA's services chapter leverages the strengths of both sides. Commitments on the entry and temporary stay of key personnel ease mobility for engineers, consultants, and IT specialists working on Indian mandates or supporting EFTA-linked operations from India. Provisions for cross-border digital delivery support the expansion of global capability centers and platform-based services. The agreement also lays the groundwork for mutual recognition arrangements in regulated professions—such as accountancy, architecture, and nursing—offering potential to streamline compliance for cross-border practice. Swiss financial service providers also stand to gain, with the agreement facilitating the licensing process to operate in the Indian market.

TEPA opens doors for collaboration across multiple value chains:

• Life sciences and clean energy: Co-development in pharmaceuticals and MedTech; partnerships in renewables and decarbonisation technologies.
• Precision engineering and advanced manufacturing: Swiss strengths in high-value components and specialised machinery align with India's growing production base.
• Maritime and shipbuilding: Opportunities for shipbuilding, repair, and maritime services as India upgrades port and fleet capabilities.
• Digital and cleantech: Joint ventures in geothermal, analytics, and industrial digitalisation where Indian talent and Swiss IP can combine.

TEPA also fosters stronger connections with micro, small, and medium-sized enterprises through matchmaking initiatives, skills development programs, and cooperation on standards.

TEPA respects India's regulatory sovereignty. Firms must comply with Indian customs, product standards, and sector-specific controls, often with state-level nuances. For medical products and devices, Indian authorities will continue to apply risk-based review, post-market surveillance, and labelling requirements. Across sectors, attention to licensing, data localisation norms, and procurement preferences remains essential. In practice, disciplined compliance is a competitive advantage: companies that build robust local governance and quality systems move faster and face fewer surprises.

While TEPA opens doors for trade and investment, Swiss companies entering India must navigate a complex and evolving tax landscape. Understanding the tax landscape is essential to structuring operations efficiently and ensuring long-term viability.

India's tax regime spans multiple layers. Direct taxes include corporate income tax rates that vary depending on the entity and its activities—e.g., regular companies face a corporate income tax rate of 34.94%, while special rates between 25.17% and 29.12% apply to certain domestic companies that forego exemptions or have a turnover up to a prescribed threshold. Transfer pricing rules align with OECD standards, requiring detailed documentation and arm's length pricing for cross-border transactions. India has signed over 95 Double Taxation Avoidance Agreements (DTAAs), including with Switzerland, which help mitigate withholding tax burdens on dividends, interest, royalties, and technical service fees.

India's Goods and Services Tax (GST) is a multi-stage, destination-based tax system that applies to the supply of most goods and services across the country. It replaced a complex array of central and state-level indirect taxes with a more unified framework, though it remains layered, unlike Switzerland's VAT system, which is centrally administered and applies a single federal rate across cantons, due to India's federal structure. The system is designed to be comprehensive, covering both physical and digital supplies, including online platforms and e-invoicing. Businesses are required to register based on turnover thresholds and must file monthly and annual returns. Input tax credit is available but subject to strict invoice matching and documentation requirements. Recent reforms have introduced a GST Appellate Tribunal to streamline dispute resolution, revised place-of-supply rules for intermediary services, and implemented provisional refunds for certain structures. These changes aim to simplify compliance, reduce litigation, and align India's GST more closely with global best practices.

India's capital tax regime plays a pivotal role in shaping investment decisions, structuring transactions, and planning exits. Capital gains tax applies to the sale of assets such as shares, property, and securities, with rates varying between 13.65% and 38.22%, based on the holding period and asset type. For listed securities, short-term capital gains are taxable at the rate of 21.84%. In addition to capital gains tax, India levies a Securities Transaction Tax (STT) on the purchase and sale of listed securities, which adds to the overall transaction cost but is not creditable against income tax. These taxes are particularly relevant for foreign investors and multinational companies, as they influence the timing and structure of equity investments, mergers, and divestitures. Investors must also consider the impact of stamp duty, which applies to various instruments including share transfers and property transactions, with rates differing across states. Together, these levies form a complex but navigable landscape that requires careful planning to optimise tax outcomes and ensure regulatory compliance.

Despite the complexity of India's current tax landscape, the direction of reform is overwhelmingly positive—especially for foreign investors and multinational companies. A new income tax law introduced in 2025 aims to simplify procedures, rationalise rates, and streamline filing processes, reducing the administrative burden and improving predictability. GST 2.0 reforms are also underway, with rate reductions designed to stimulate mass consumption and ease compliance, particularly for small and medium-sized enterprises. The introduction of advance ruling authorities is offering greater clarity on GST treatment, while the principle of substance over form is gaining traction in tax assessments, helping businesses align their operations with economic realities rather than rigid formalities. Adoption of technology is accelerating, with digital platforms improving transparency, automating compliance, and reducing manual intervention. Meanwhile, transfer pricing regulations are increasingly aligned with OECD standards, offering more predictability and consistency for cross-border transactions. Together, these reforms signal a maturing tax environment—one that is becoming more investor-friendly, transparent, and globally integrated.

In parallel with these tax reforms, India is also strengthening its intellectual property (IP) framework—an area that, while not part of the tax terrain, is critically important for Swiss companies considering entering India. Under TEPA, both India and Switzerland have committed to providing effective and non-discriminatory protection of IP rights, including enforcement against infringement and streamlined mechanisms for resolving disputes. Beyond the agreement itself, the two countries have resumed a dedicated bilateral IP dialogue, creating a direct channel for Swiss businesses to raise concerns and seek clarity on patent, trademark, and copyright issues. Annual stakeholder roundtables and increased cooperation between Indian and Swiss IP authorities are expected to improve transparency and reduce administrative friction. For Swiss firms in pharmaceuticals, MedTech, software, and precision manufacturing, this evolving IP landscape offers greater confidence in safeguarding proprietary technologies and creative assets while expanding into the Indian market.

Swiss companies entering the Indian market under TEPA must approach their expansion with careful planning and professional guidance, particularly when it comes to legal structure, funding, and tax strategy. India offers a range of entity types—liaison offices, branch offices, project offices, wholly owned subsidiaries, and limited liability partnerships—each with distinct implications for operational flexibility, regulatory compliance, and tax exposure. Choosing the right structure is not only a matter of Indian law but also affects how the entity is treated under Swiss tax rules. Funding instruments such as equity shares, rupee loans, external commercial borrowings, subventions, non-convertible debentures, compulsorily convertible debentures, and preference shares must be tailored to the business model and optimised for tax efficiency. Similarly, decisions around greenfield setups versus acquisitions—whether through business or stock transfers—require a thorough evaluation of commercial, legal, and fiscal outcomes.

Repatriation strategies also demand close attention. Payments such as dividends, interest, royalties, fees for technical services, and share transfers are subject to Indian withholding taxes, which must be managed considering treaty relief. The choice of jurisdiction within India—including potential tax-free zones—can influence both Indian and Swiss tax outcomes, especially under Pillar 2 rules. Transfer pricing arrangements must ensure that residual profits are appropriately allocated to the Swiss entrepreneur entity, and permanent establishment (PE) risks should be proactively addressed. In short, while TEPA opens the door to significant opportunities, Swiss firms must seek expert advice to navigate the layered regulatory and tax landscape and ensure their India footprint is both compliant and strategically sound.

TEPA offers Swiss businesses a faster lane into India's scale and growth, and a preferred market access. The combination of tariff relief, investment commitments, services mobility, and standards cooperation points to a deeper, more resilient commercial footprint. Success will hinge on thoughtful localisation, rigorous compliance, and targeted partnerships that translate paper preferences into sustainable market share. For firms prepared to execute, TEPA is an opportunity to build enduring positions in a market that is reshaping global demand.

To do so, Swiss companies must begin building robust networks on the ground in India. The country's business landscape is layered, relationship-driven, and regionally nuanced. Firms that enter without trusted local partners—whether Swiss peers already operating in India or well-aligned Indian companies—risk being overwhelmed by complexity and missing critical signals. Early engagement with experienced players can accelerate onboarding, reduce missteps, and unlock strategic alliances that go beyond transactional gains.

Equally important is a shift in mindset. Swiss firms accustomed to prioritising expansion into traditional markets such as the United States must now broaden their horizons. India is no longer a peripheral option—it is a central node in the global growth map. TEPA makes India more accessible, but it is up to Swiss businesses to recognise its potential not just as a manufacturing base or export destination, but as a dynamic ecosystem for innovation, scale, and long-term value creation.