India-Australia Trade Pact

November 23, 2022

The Australian Parliament recently approved the free trade agreement with India. In India, such agreements require approval from the Union Cabinet.

What is AI-ECTA?

The Australia-India Economic Cooperation and Trade Agreement (AI-ECTA) was signed by the two countries on April 2, 2022.
This free trade agreement eases trade between India and Australia by reducing customs duties, regulatory laws, subsidies and quotas on products under import-export.
The pact ensures that the cost of production is cheaper when compared with other countries.

Why is AI-ECTA significant?

AI-ECTA is the first free trade agreement that India signed with a large developed economy in the last decade.
Besides AI-ECTA and an FTA with Japan, all of India’s FTAs are with other developing countries like Singapore, South Korea, ASEAN, Malaysia and UAE.
Once it becomes operaitonalized, AI-ECTA will provide India a duty-free access to Australian market for over 6,000 broad sectors. These include textile, leather, furniture, jewellery, machinery and others.
It will help Australia reduce its dependence on Chinese market and forge new bilateral trade ties.
Under this free trade agreement, Australia will provide zero-duty access to India for some 96.4 per cent (by value) of its exports. This includes products that currently incur 4 to 5 per cent customs duty in Australia.
Numerous labour-intensive sectors in India are expected to benefit from this trade pact. These include textile and apparel, agricultural and fish products, leather, footwear, furniture, sports goods etc.
India exported to Australia goods worth 8.3 million USD in 2021-22. India’s imports from Australia was at 16.75 billion USD during this period. The FTA will increase the bilateral trade value from the present 27.5 billion USD to 45-50 billion USD in the next five years.
It will enhance people-to-people relations and foster cultural ties between the two countries.
It will increase access to a range of skilled service providers, investors and business visitors, boosting investments and business opportunities significantly.

« Previous Post Next Post »