The move will lead to direct savings and less administration, the government said, along with lower prices for products from industrial machinery to clothes and fridges. It could be especially welcomed by companies facing rising costs amid global inflation and the appreciation of the Swiss franc, which makes Swiss exports more expensive abroad.

The annual gain is estimated at more than 860 million Swiss francs ($1.02 billion) from lower purchasing and administrative costs for companies as well as productivity gains, said the State Secretariat for Economic Affairs (SECO).

Imports of goods were equivalent to 43% of economic output in 2022 in Switzerland, home to multinationals such as drug giants Roche and Novartis as well as food maker Nestle and engineering firm ABB.

The scrapping of import duties applies to products such as capital goods, raw materials, semi-finished products and machinery, as well as consumer products such as bicycles, household appliances and clothing.

It does not apply to agricultural products such as live animals, plants, seeds and animal feed.

"Lifting industrial tariffs improves Switzerland's standing as a business and industrial hub by easing the financial and administrative burden on both companies and consumers," the government said in a statement on Tuesday.

"It makes it easier for Swiss industry to procure competitive inputs and to diversify. In turn, this will raise Swiss companies' productivity at home and abroad, increase their competitive standing and streamline trade relations overall."

The decision, originally decided by the Swiss parliament in October 2021, came into effect on Jan. 1.

No measures have been taken to compensate for lower customs revenue, the government said, although it expects higher economic output to generate higher tax receipts in future and offset the loss.

($1 = 0.8447 Swiss francs)