India Accelerates Foreign Direct Investment Inflows with Landmark EFTA Deal and Space Sector Liberalization

India has taken significant steps to enhance its foreign direct investment (FDI) landscape through two major developments: the signing of a landmark trade agreement with the European Free Trade Association (EFTA) and a sweeping liberalization of its space sector regulations. According to reports from Reuters, Bloomberg, and the Financial Times, these initiatives represent a strategic push by New Delhi to attract global capital and integrate more deeply into global supply chains.

On July 15, 2026, India and the EFTA—which comprises Switzerland, Norway, Iceland, and Liechtenstein—signed the Trade and Economic Partnership Agreement (TEPA). Under this pact, as reported by Reuters, the EFTA nations have committed to investing $100 billion in India over a 15-year period. This massive capital influx is projected to support the creation of approximately 1 million direct jobs within India. In return, India has agreed to gradually reduce or eliminate import tariffs on a wide range of EFTA-origin industrial products, machinery, and pharmaceutical ingredients, facilitating smoother trade flows between the regions.

Complementing this bilateral agreement, the Indian government has enacted a major policy shift to attract global aerospace companies. Reuters and The Economic Times report that on July 18, 2026, the cabinet approved a major liberalization of its FDI policy for the space sector. Under the revised framework, foreign companies can now invest up to 100% under the automatic route for satellite manufacturing, satellite data products, and ground segment operations.

Furthermore, the new rules allow up to 74% FDI under the automatic route for launch vehicles and associated systems, and up to 49% for manufacturing components and subsystems. Bloomberg reports that these changes are designed to significantly lower regulatory barriers for private space enterprises looking to establish operations in India. By easing these restrictions, India aims to position itself as a global hub for aerospace manufacturing and satellite technology, leveraging its cost-effective engineering capabilities.

The dual approach of securing long-term investment commitments from European partners while deregulating high-tech sectors like space technology highlights India’s evolving economic strategy. For international businesses, the reduction of tariffs on machinery and pharmaceutical ingredients under the TEPA, combined with simplified entry routes in the aerospace sector, offers substantial opportunities for market entry and expansion. These reforms are expected to foster technological collaboration and strengthen India’s industrial base over the next decade and a half.