New Delhi [India], February 14 : State Secretary for Foreign Affairs in Switzerland, Alexandre Fasel, on Thursday, said that India and Switzerland are poised to strengthen their economic ties through a new bilateral investment treaty.
In an interview withon Thursday, Fasel said, "One aspect we deem necessary is to have a bilateral investment treaty to protect investments. That is something we are already discussing, and we are confident we will have a good solution."
Earlier this week, the State Secretary for Economic Affairs from Switzerland visited India with 100 potential investors and businessmen from Switzerland and other EFTA countriesNorway, Iceland, and Liechtensteinto explore how to invest and under what conditions.
Fasel commented on the potential bilateral agreement and said, "Interest is there, the commitment to do it is there, and the will of Indian authorities to make it happen is there, so I'm very confident."
Last year, in a major shock, Switzerland suspended Most Favored Nation (MFN) treatment for Indian companies, directly impacting their running costs and taxation dynamics.
Speaking on the suspension of MFN, Alexandre Fasel said, "I don't think it will have an impact. I think it will not have any impact on the free trade agreement, TIPA, which we have concluded and which is now in the process of ratification. It will come into force later in the year."
"When you refer to the MFN clause, that was the question within the double taxation agreement. We did not actually suspend or withdraw that statement; we just adapted the content of the MFN clause to the Indian reading of what it means in that particular context," he added.
Further explaining what this meant for Indian companies operating in Switzerland, Fasel said, "The confusion was on our side as well. We have a Most Favored Nation clause in this double taxation agreement, and the question then precisely is how it is going to be applied and whether retroactivity will apply in the application of the nation clause. We thought there would be retroactivity; that was quite natural to us. However, the Indian position, as seen in the court case, is that it was not. So, we adapted to that."
He further explained, "Both companies in India and Switzerland will have to pay the taxes that are agreed upon in the double taxation agreement. Unfortunately, it will not be possible for companies in Switzerland and India to be treated more favourably based on agreements India has done with other countries, which are more favourable and should have been applied. That, unfortunately, is not possible now."
Fasel emphasised that as the India-Switzerland relationship becomes more intense and wide-ranging, it will create jobs and drive investments once the TEPA agreement comes into full force.
"We are on the verge of an even more intense and wide-ranging relationship based on the free trade agreement TEPA. As we say, it will enter into full force soon, which will drive a huge amount of investments from Switzerland and EFTA countries. The European Free Trade Association will drive investments into India, which will create jobs by companies from Switzerland, Norway, Iceland, and Liechtenstein. This will condition our bilateral relationship in the next decade or so," he told ANI.
"TEPA is an instrument through which investments will come, but of course, for investments to be deployed and actually committed, the investment climate and legal framework must be good and conducive. That is something Indian authorities are working on," he added.
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