The Trade and Economic Partnership Agreement (TEPA) between India and the European Free Trade Association (EFTA), which entered into force on October 1, 2025, could profoundly reshape investment opportunities for Swiss financial players. Behind this agreement lies a clear ambition: to channel USD 100 billion in investments by 2040 and support the transformation of a market destined to become a primary centre of gravity for the global economy. The question is no longer whether India matters, but how best to position oneself within it.
When history sheds light on the present
Economic relations between Switzerland and India are nothing new. As early as 1947, as Indian independence was taking shape, both countries had already expressed a desire to strengthen trade ties. At the time, India remained a fragmented entity composed of more than 560 princely states, some of which would only gradually join the young republic. Nevertheless, this early connection led to the signing of a treaty of friendship in 1948, laying the foundations for a lasting relationship.
The TEPA builds on this continuity, albeit on an unprecedented scale. More than a simple free trade agreement, the treaty serves as a strategic platform designed to regulate and guide foreign direct investment (FDI), particularly within financial services. In many respects, it marks a turning point.
A comprehensive agreement for a strategy of influence
The TEPA stands out for its comprehensive scope, covering goods, services, intellectual property, and foreign direct investment alike. It is this latter dimension that carries the greatest significance for the financial sector. Access to the Indian market is not granted solely in exchange for open trade, but also in return for concrete investment commitments. In this sense, the TEPA extends the logic promoted by the WTO: creating frameworks that open markets while preserving the economic and strategic balance of the states involved.
What the TEPA changes in practical terms
Until now, the expansion of Swiss financial institutions into India has taken place within a fragmented and often restrictive framework. The TEPA introduces greater clarity, particularly with regard to commercial presence (Mode 3).
Three mechanisms already present within the Indian regulatory framework will now apply to EFTA states on a binding basis:
- 100% Subsidiaries: The framework formalises the ability of foreign institutions to establish wholly owned subsidiaries (WOS), thereby strengthening their operational autonomy.
- Opening of Share Capital: EFTA investors may now acquire aggregate shareholdings of up to 74% (which is the FDI limit) in Indian private banks. However, the 49% threshold remains one of the limits beyond which approval from the Government of India is still required. Reserve Bank of India’s approval is required for an entity intending to hold more than 5% in a bank in India.
- Greater Transparency: India has committed to making authorisation procedures more accessible and transparent, thereby facilitating risk assessment for investors.
While these developments do not completely transform market access, nor do they challenge the discretionary power of the Indian authorities, they significantly reduce uncertainty — a decisive factor for any financial institution.
Transparency and Predictability: A Secure Yet Demanding Framework
While the TEPA strengthens India’s business climate by requiring greater transparency from the authorities, this development also reflects a broader trend praised by several leading Indian entrepreneurs. Sunil Bharti Mittal, founder of the Bharti Group, has notably highlighted the progress made in recent years to improve the business environment and attract international investment, while also calling for continued efforts in this direction.
Nevertheless, caution remains necessary, as certain provisions still require clarification. One point in particular deserves close attention: the absence of a traditional investment protection mechanism. Unlike the former bilateral investment treaty between Switzerland and India, which was in force from 2000 to 2017, the TEPA favours diplomatic channels between states for dispute resolution. For investors, this means one thing above all: managing risks related to investment protection will largely depend on contractual structuring.
A Framework of Reciprocal Commitment
The TEPA does not merely open a market; it also creates expectations. The USD 100 billion investment target is accompanied by a rebalancing clause: should commitments not be fulfilled within 15 years, India may adjust certain concessions relating to trade in goods.
This mechanism sends a clear signal: India is not simply seeking capital, but long-term partners capable of supporting its economic transformation.
A Paradigm Shift for Swiss Banks
Beyond its legal provisions, the TEPA sends a powerful strategic message. With its vast domestic market and extensive talent pool, India aims to attract capital, develop expertise, and integrate further into global value chains.
For banks and financial advisers, several areas of opportunity are emerging, including:
- Developing local investment projects and initiatives
- Developing local capabilities, including through service centres
- Relocating certain highly skilled functions
The example of UBS in Hyderabad, which recently expanded its Global Capability Centre to employ thousands of local professionals, illustrates how the TEPA framework encourages the insourcing, in India, of high-value-added services.
Between Legacy and Reopening
To understand the current momentum, it is also necessary to look to the past. Long characterised by a cautious approach — inherited partly from certain events in its colonial history and from the protectionist economic policies of the Nehru era — India now appears to be entering a new phase of economic reopening.
This movement echoes a much older reality: for centuries, the subcontinent was one of the world’s principal trading hubs. The TEPA can therefore be interpreted as an attempt to reconnect with this tradition while maintaining control over the conditions governing market access.
In practice, the TEPA represents neither full liberalisation nor merely a technical agreement. It establishes a hybrid framework that is both open and demanding. For players within the Swiss financial centre, the challenge is clear: to transform this framework into concrete opportunities while carefully managing the associated risks.
Against the backdrop of ongoing global economic shifts, India will not simply be another market; it will become one of the principal arenas in which some of the most consequential investment decisions of the coming years are made.
[1] Trade and Economic Partnership Agreement