India and Australia’s Economic Cooperation and Trade Agreement (ECTA) entered into force on December 29, 2022, granting duty-free access to a variety of goods in several industries.
India, the fifth-largest economy in the world, and Australia, the 14th-largest, are brought together by the India-Australia Trade Pact. Australia and India’s combined bilateral trade is anticipated to increase from its current $31 billion to $45 to $50 billion in 5 years. The Ministry of Commerce and Industry projects a $10 billion rise in India’s exports of goods by 2026–2027.
India and Australia signed the Economic Cooperation and Trade Agreement, often called ECTA, on April 2, 2022. Later, on November 21, 2022, it was approved. After exchanging written notices of the agreement on November 29, 2022, it is now taking effect.
The India-Australia ECTA opens up trade between the two nations. A market of 1.4 billion people and one of the world’s fastest-growing major economies, India, is now available to Australian stakeholders.
It is the only agreement that completely eliminates duties; according to the Ministry of Commerce and Industry, Australia will not impose customs duties on any of the tariff lines. Australia has made broad commitments in about 135 subsectors on the services side.
Distribution, financial, and telecommunications services are just a few of the 85 sectors and subsectors where Australian service providers are getting full or partial market access. Australia would also receive the best treatment offered by India to its prospective trade agreement partners in 31 sectors and subsectors.
The providers of higher education and adult education, business services, R&D, engineering and construction services, tourism, and travel will all profit from this.
The majority of the two countries’ producers, processors, and consumers will profit from this agreement. It is significant that the trade deal will benefit India’s education, pharmaceutical, and tourist industries. The labour-intensive industries in India that make textiles, leather, gems and jewellery, furniture, food and agricultural items, engineering products, and medical equipment stand to gain from it.
Additionally, this would end the double taxation on IT services that was harming our ability to compete and reduce our profitability. According to Union Minister Piyush Goyal, double taxation for the IT sector will end on April 1. This will save India over a billion dollars going forwards, and provide a competitive edge, and generate a lot of jobs.
Along with the FTA with Australia, India also operationalised its FTA with the UAE this year. In 2022, the Center will have created two trade agreements.
More than 85% of Australian exports to India are now free of tariffs owing to the Economic Cooperation and Trade Agreement. This includes essential exports including titanium dioxide, wool, lamb, barley, oats, fresh rock lobsters, cosmetics, and numerous metallic ores.
An additional 5% of exports are subject to reduced or eliminated tariffs over the course of six years, including macadamia nuts, avocados, berries, seafood, pharmaceuticals, cochlear implants, vitamins, infant formula, breakfast cereals, pasta, sandalwood chips, pumps and fillers, and mining machinery lifting parts. Taxes on premium wines, lentils, almonds, oranges, and strawberries have been significantly reduced.
Australian Minister for Trade and Tourism Senator the Hon Don Farrell in a press release stated, “The Australian Government welcomes today’s entry into force of the Australia-India Economic Cooperation and Trade Agreement (ECTA). ECTA underscores the Government’s commitment to delivering opportunities to diversify trade that are commercially meaningful for Australian businesses.”
From today Australian businesses have greater access to the Indian market of 1.4 billion people, and one of the world’s fastest growing major economies. A serious window of opportunity has opened for our exporters to move into an export market valued at over $24 billion in 2021, ahead many of our key competitors,” he added.
As the India-Australia ECTA entered into force, Union Minister Piyush Goyal gave a press conference. The Minister said, “Australia, which is largely dependent on imports, will benefit hugely, they will soon start seeing a lot more finished goods coming in from India, providing a huge amount of work and job opportunities in both goods and services provided by Indian talent.”