Australia-India economic cooperation and trade agreement – A good opportunity for the bilateral trade

The Australia-India Economic Cooperation and Trading Agreement (ECTA), which went into effect on December 29, 2022, have opened up new trade prospects for Australian firms and consumers. With high tariffs on some extra products, over 85% of Australian commodities exported to India are already duty-free, and that percentage will increase to 90% in six years. In addition, 96% of imports from India are currently duty-free and will increase to 100% in four years. This trade agreement is expected to improve the business of both sides. It can also play an important role in economic development beyond import and export. With this free trade agreement, Australia can gain greater business opportunities in the Indian market of 1.4 billion people. India is one of the fastest-growing economies today.

First Phase Action

This action of the central government has created a great opportunity for exporters. While it was planned that the tariff reductions would be implemented gradually, the first phase of tariff reduction has been done today. It has been announced that the second phase of tariff reduction may be on January 1, 2023.

Tax reduction for what goods?

The list of tariff reductions has eliminated tariffs of more than 85% on imports from Australia to India of wool, lamb, barley, oats, crabs, beauty products, and many other important minerals, including iron, and titanium dioxide. As a result, Australian exporters can now export at zero duty.

Tax will be Reduced Gradually.

At the same 5% export duty, which will be phased out, imports include macadamia nuts, butter, berries, seafood, pharmaceuticals, cochlear implants, vitamins, baby products, breakfast cereals, pasta, sandalwood chips, pumps and pillars, machine parts, mining machinery, etc. It has also been announced that many will be gradually reduced to 0%.

Tariff Concession

In addition, many Australian producers of premium wine, lentils, almonds, oranges, and strawberries, can now receive a reduced tariff concession. Through this free trade agreement, imports of the above products can be imported here at lower tariffs. Due to this, the price will also decrease. Overall, this free trade agreement will boost exports. This will strengthen the bilateral partnership. It is expected to strengthen the commitment of the government.

Meanwhile, Minister of Commerce & Industry Piyush Goyal took to his Twitter page to comment that this is the beginning of a new beginning. It is also a major milestone in Irudarpabu’s business. This will increase exports and also promote employment. This increases the scope for investment. Above all, it strengthens the partnership between the two sides.

What are the main Features of this Agreement?

100% duty paid will be zero taxed by Australia. An additional 10 lakh jobs will be created in India in the next 4-5 years and investments from Australia will increase. More than 1 lakh Indian students will benefit from the Post-Study Work Visa and India’s yoga teachers and chefs will get the opportunity. The agreement is expected to boost bilateral trade from $27 billion to $45-50 billion through this free trade agreement. Australia will offer zero duty on approximately 96.4% of exports from day one. This includes some items that attract 4-5% customs duty in Australia.

Export and Import

Exports from India Petroleum products, textiles and garments, engineering products, leather products, chemicals, gems, and jewellery products are also exported from India to Australia. The same imports include capital goods, coal, minerals, and intermediate goods. Australia has been India’s 17th trading partner and the bilateral trade in goods and services is worth $27.5 billion. Gems and jewellery, textiles, leather, footwear, furniture, food and agricultural products, engineering products, and automobile components from India will also benefit from this agreement. Amidst this bilateral agreement, Tirupur exporters will benefit greatly.

Final Remarks

On April 2, 2022, the then-Minister of Trade, Tourism, and Investment, Dan Tehan, and India’s Minister of Commerce and Industry, Consumer Affairs and Food, Public Distribution, and Textiles, Piyush Goyal, signed the Australia-India Economic Cooperation and Trade Agreement. With the aid of ECTA, Australian enterprises can diversify their trade and gain access to the rapidly expanding 1.4 billion-person Indian market. To take advantage of the potential for greater economic connections between Australia and India, resumed negotiations for a Comprehensive Economic Cooperation Agreement (CECA) will build on the results of ECTA.