If approved by lawmakers, the legislation is expected to face a national referendum, where nationalist groups have signalled opposition, arguing that deeper integration with the EU could undermine Swiss sovereignty.

The Federal Council said the proposed framework was designed to safeguard Switzerland’s economic interests and ensure continuity in its relationship with the EU.”

“In view of the tense geopolitical situation, stable and reliable relations with neighbouring European countries are of strategic importance,” the council said in a statement.

The government added that strengthening institutional cooperation with the bloc would provide greater certainty for Switzerland’s export-driven economy.

The legislative package builds on an agreement initially reached between Switzerland and the European Union in December 2024.

According to the Federal Council, the framework would help create predictable conditions for trade and economic cooperation while supporting long-term prosperity in the Alpine country.

Under Switzerland’s system of direct democracy, major legislative changes can be challenged through a nationwide referendum.

Political observers say the proposed measures are likely to face strong scrutiny from nationalist groups that oppose closer institutional ties with the European Union, setting the stage for a potentially contentious public vote.

Sitharaman said the proposed fund would help the government address disruptions such as supply chain interruptions and sudden economic stresses while maintaining stability in public finances.

The stabilisation fund is intended to provide the government with additional fiscal headroom during periods of volatility in global markets or trade flows, Sitharaman told lawmakers.The proposal comes as the government seeks parliamentary approval for gross additional spending of 2.81 trillion rupees.

According to Sitharaman, part of the additional expenditure will be offset by savings and higher receipts from various ministries and departments.She said the proposed spending adjustments would not increase the government’s overall expenditure beyond the levels outlined in the federal budget.

Sitharaman also proposed additional fertiliser subsidies amounting to about 192.30 billion rupees to cover higher spending under the nutrient-based subsidy policy and payments for urea subsidies.

India’s fertiliser subsidy bill has come under pressure following disruptions to supply routes linked to tensions involving Iran, particularly around the Strait of Hormuz, a key corridor for global fertiliser shipments.

The disruption has pushed up prices for crop nutrients such as urea and ammonia, increasing import costs for major buyers including India.

Sitharaman said the government would ensure there was no shortfall in funds for fertiliser subsidies for farmers.