The new trade pact will provide new market opportunities for Australian and Indian businesses and consumers
A consignment of goods including jewellery and engineering items is set to be shipped from India to Australia as the interim Australia India trade deal goes into effect after an eight-month wait. The interim pact, also known as the Economic Cooperation and Trade Agreement (ECTA), has the potential to double bilateral trade to $50 billion in five years. The trade deal was signed on 2 April.
India is set to benefit from the preferential market access provided by Australia on 100 per cent of its tariff lines, with 98.3 per cent being effective from 29 December 2022. The rest will be implemented gradually over five years.
The pact is expected to boost exports of labour-intensive items such as automobiles, textiles, gems and jewellery, medical devices, and engineering goods. The Confederation of Indian Industry (CII) has said that this could result in a $10 billion increase in India’s merchandise exports by FY27 and create an additional one million jobs in India, as well as providing more job opportunities in Australia.
The activation of the agreement will give Australian businesses greater access to the Indian market of 1.4 billion people
In 2020, India was Australia’s seventh largest trading partner, with two-way trade valued at $24.3 billion, and sixth largest goods and services export market, valued at $16.9 billion. The Australian government’s goal is to increase India’s ranking to one of the top three export markets by 2035 and make India the third largest destination for Australian investment in Asia. The ECTA signed earlier in 2022 aimed to strengthen this relationship further.
Former Australian Prime Minister Scott Morrison stated that the agreement would create significant trade diversification opportunities for Australian producers and service providers looking to do business in India, valued at up to $14.8 billion per year.
The agreement will provide benefits such as the elimination of tariffs on sheep meat and wool, reduced tariffs on wine, and improved opportunities for the horticulture industry to supply India’s growing food demand. It will also facilitate the recognition of professional qualifications and provide access to sectors such as higher education, business services, and telecommunications. The agreement that has come into effect is also expected to create jobs and growth in both countries and lay the foundation for a full free trade agreement in the future.
The pact is expected to boost exports of labour-intensive items such as automobiles, textiles, gems and jewellery, medical devices, and engineering goods
The activation of the agreement will give Australian businesses greater access to the Indian market of 1.4 billion people. Tariffs on 85 per cent of Australia’s exports to India will be eliminated, including wool, lamb, barley, oats, and fresh rock lobsters.
An additional 5 per cent of exports, such as macadamia nuts and seafood, will have lower tariffs that will be phased down to zero within six years. Indian tariffs on Australian products such as premium wine and almonds will also be significantly reduced.
The activation of ECTA will also benefit manufacturers, processors, and consumers through the elimination of tariffs on imports of Indian goods and inputs. Australian services suppliers will gain access to 85 sectors and sub-sectors, including distribution and financial services.
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#India🇮🇳 is set to benefit from the preferential market access provided by Australia🇦🇺 on 100% of its tariff lines, with 98.3% being effective from 29 Dec 2022. The rest will be implemented gradually over 5️⃣ years. #ECTA #TheIndianSunhttps://t.co/x1ZxHQECrA
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