New Delhi [India], February 13 : Switzerland's decision to adapt the Most Favored Nation (MFN) clause in its double taxation agreement with India will not impact bilateral financial and economic relations, according to Alexandra Fasel, State Secretary at the Swiss Federal Ministry of Foreign Affairs.
The Swiss official said, "It will certainly have no impact on this very important free trade treaty, TEPA, which we have concluded and which is now in the process of ratification and should then to interforce in the latter part of the year or at the latest next year."
In an exclusive interview with ANI, Fasel addressed concerns regarding the implications of this move on Indian industries operating in Switzerland.
Fasel emphasized that Switzerland has not entirely suspended or withdrawn the MFN clause but rather aligned its interpretation with India's position.
"When you refer to the Most Favored Nation Clause, that was a question within the double taxation agreement and we did not exactly suspend or withdraw that statement, we just adapted the content of the Most Favour Nations Clause to the Indian reading of what it means in that particular context," he explained.
When asked whether Indian companies operating in Switzerland will face additional taxes, Fasel clarified that taxation remains governed by the double taxation agreement.
"Both companies in India and in Switzerland will have to pay the taxes that are agreed upon by the double taxation agreement and what will sadly not be possible is that companies in Switzerland and in India in their bilateral relationship are treated more favorably based on agreements India has done with other countries that are more favorable and should have been applied, but that unfortunately was now not possible," he stated.
Despite concerns over the MFN clause, Fasel expressed optimism about the future of India-Switzerland economic relations.
He highlighted the Trade and Economic Partnership Agreement (TEPA), recently concluded between India and the European Free Trade Association (EFTA), which includes Switzerland, Norway, Iceland, and Liechtenstein.
He said, "At the dawn of an even more intense and wide-ranging relationship based on the free trade agreement, the TEPA, that is going to enter into force soon. That will drive a huge amount of investment from Switzerland and the other European EFTA countries."
"EFTA being the European Free Trade Association, will drive investment into India, will drive job creation into India by companies from Switzerland, Norway, Iceland, Liechtenstein and that will condition our bilateral relationship for the next decade or so," Fasel stated.