Soon we can bite into an Australian apple as we sip on to their wine and get power from the thermal power plants that run on Australian coal. On the last working day of 2022, came to effect the India-Australia Economic Cooperation and Trade Agreement (ECTA). This allows India to export 98.3 per cent of its tariff lines at zero duty to Australia. The rest 1.7 per cent would also be made duty free over the next 5 years. Similarly, India is offering zero duty access to 90 per cent value of products from Australia.
As India is ascertaining its global position, trade plays an important role and agreements such as this provides India a competitive edge. The current export of goods and services stands at USD 675 billion and Piyush Goyal, Minister of Commerce and Industry pointed to India eyeing a USD 2 trillion international trade by the year 2030 and the economy growing to USD 30 trillion by 2047.
Currently, India is the 9th largest trading partner to Australia while Australia is the 17th largest to us. This trade agreement benefits India in a two-pronged way. Labour intensive sectors like textiles and apparel, agricultural and fish products, leather, footwear, furniture, engineering products, jewellery and select pharmaceuticals will be able to access the Australian market with their finished goods. While Indian industries such as steel, aluminium, garments and others will get cheaper raw materials which will enable them to become competitive. This trade deal has livened the market. “On 29th December itself, two consignments of gem and jewellery and glass were shipped,” said Rajalakshmi Devraj, IDAS, Additional DGFT, Chennai. At a capacity building programme organised by EEPC India, exporters were briefed on the trade agreement.
Basket of Benefit
This agreement comes with a welcome relief to the Indian services industry. Their long-standing demand of double taxation has been removed. This will save over a billion dollars in 5 – 7 years. There is good news for the pharma industry too. Drugs approved in other developed countries will get quicker approval in Australia. This will enable easy penetration into their market. Students and working professionals are also to benefit. Post study work visa for a period of 18 months to 4 years will be made available benefitting about 100,000 students in Australia. Along with this, an arrangement has been made for work and holiday visa for young professionals.
“Of Australia’s 25 million population, 1 million are Indians. Our close bonds are cemented by similar interests, people-people link and love for cricket,” said Sarah Kirlew, Australian Consul General.
India stands long-term gains through this deal. Exports are expected to increase by USD 10 billion by 2026-27 with a creation of about 10 lakh jobs. The total bilateral trade is expected to cross USD 45-50 billion by 2035. It is expected that there will be enhanced job opportunities for Indians in Australia and increased remittance and investment flows to India from Australia.
“Great care has been taken in negotiating the deal. We have provided access to Australian coal, wine, almonds, cotton, lentil, pears, oranges, etc. At the same time, milk and other dairy products, wheat, sugar and few other products have been kept out. This will ensure a fair play for our industries,” said Dr M Balaji, Joint Secretary, Ministry of Commerce and Industry, Government of India. China, Japan, USA, Vietnam already have such agreements with Australia and have been benefitting from the same. India has joined the league.
“In June 2022, we signed an FTA with UAE. Our talks with UK, European Union and Canada are going on track and by this year, all these will get materialised,” said Dr Balaji.
