India and Liechtenstein are accelerating a new tax agreement to prevent double taxation on cross-border business. This move is a key step under the India-EFTA trade framework, which aims to attract $100 billion in investment over 15 years. The deal aims to remove financial uncertainty for European companies operating in India, helping sectors like manufacturing, wealth management, and agricultural technology.
India and Liechtenstein have officially begun talks to speed up a Double Taxation Avoidance Agreement (DTAA). This legal framework is designed to stop companies from being taxed twice on the same income in both countries. By removing this barrier, India aims to create a clearer, more predictable tax environment for businesses based in the European nation looking to expand their presence in the Indian market.
This development is a key part of the broader India-EFTA Trade and Economic Partnership Agreement (TEPA). The TEPA deal, which brings together India and the four EFTA member states—Iceland, Liechtenstein, Norway, and Switzerland—includes a commitment to attract $100 billion in foreign investment into India over the next 15 years. Establishing a clear tax pact is considered a logical step to make this ambitious investment goal achievable.
While the current direct trade volume remains relatively small, with roughly $3.3 million recorded in fiscal year 2026, the potential for growth is high. Liechtenstein has historically invested about $110 million in India. Several companies from the country have already started building their operations in India, proving the potential for cross-border integration. For instance, Hilti is already running export-oriented manufacturing units in Vadodara, and Savannah Seeds is working on improving rice cultivation through advanced agricultural technology. Additionally, LGT Group has established a footprint in the Indian wealth management sector.
The push for the new tax pact coincides with the visit of Hereditary Prince Alois to New Delhi, signaling strong political backing for deeper economic ties. For investors and businesses, the primary value of a DTAA is the reduction of tax-related risks when moving capital or expertise between borders. If the agreement is finalized, it could lower the cost of doing business and encourage more Liechtenstein-based firms to scale their operations in India.
The next steps for this process will involve review by India's Ministry of Finance and further negotiations between the two governments. Investors should monitor the progress of these talks, as they form a crucial part of the long-term trade and economic commitments made under the India-EFTA partnership.