On Thursday, the India-Australia Economic Cooperation and Trade Agreement (ECTA) entered into force, a move that would create an estimated million jobs in the country.
Due to the ECTA, 96.4% (by value) of Indian exports will be granted zero-duty access to Australia. Some of the included products currently have a 4-5% customs duty in Australia. It will also give more than 6,000 sectors in India duty-free access to the Australian market. Notable beneficiaries include labour-intensive sectors such as textiles, leather, furniture, jewellery, sports, electrical goods, railway wagons, and machinery.
To New Innings 🇮🇳🤝🇦🇺#IndAusECTA is an agreement negotiated with the speed of Brett Lee and the perfection of Sachin Tendulkar. pic.twitter.com/zLtYLuoVc8
— Piyush Goyal (@PiyushGoyal) December 29, 2022
India will also remove taxes on 90% of Australian exports, including meat, wool, cotton, seafood, nuts, and avocados.
In a press conference in Mumbai on Thursday, Indian Commerce and Industry Minister Piyush Goyal, remarked that “we will get cheaper raw materials which will not only make us more competitive globally but also enable us to serve Indian consumers better; enabling us to provide more quality goods at more affordable prices,” adding that it created a “lot of potential for exporting finished goods to Australia, since they hardly manufacture anything.”
He also announced that the ECTA will remove double taxation on India’s Information Technology (IT) services from 1 April, which was earlier “making us less competitive and making us less profitable.” Furthermore, he appreciated the Australian government “for being very sensitive and considerate, giving us full cooperation throughout the negotiations, especially in protecting the interests of the farmers and dairy sector of India.”
Glad that IndAus ECTA is entering into force today. It is a watershed moment for our Comprehensive Strategic Partnership. It will unlock the enormous potential of our trade and economic ties and boost businesses on both sides. Look forward to welcoming you in India soon. @AlboMP https://t.co/aBGKvKCtZq
— Narendra Modi (@narendramodi) December 29, 2022
Goyal stated that Indian Yoga teachers and chefs will benefit from the annual visa quota. Additionally, more than one lakh Indian students would gain from acquiring a post-study work visa for 18 months to 4 years.
“The agreement is also likely to increase investment opportunities, promote exports, create significant additional employment and facilitate strong bonding between the two countries,” he opined.
Meanwhile, in an opinion piece in the Economic Times, Goyal’s Australian counterpart Don Farrell called it a “further deepening of ties and is evidence of shared values.”
“Australia and India are natural trading partners – this agreement will unlock the enormous potential in our trading relationship,” he remarked, adding that it “reflects the government’s commitment to diversifying exports and strengthening our partnerships.” Moreover, he noted that it provides a “serious window of opportunity” for Australian exporters to gain access to Indian market valued at over $24 billion in 2021.
In 2021-22, Indian exports to Australia were valued at $8.3 billion, while it imported goods worth $16.75 billion from the country.
Economic think tank Global Trade Research Initiative (GTRI)’s co-founder, Ajay Srivastava, pointed out that the bilateral trade could cross $70 billion in the next five years due to strong trade ties between the two nations, and Canberra’s gradual distancing from China.
#IndAusECTA enters into force👏👏! #ECTA will unlock the enormous potential in our trading relationship. Effective today,
— Barry O’Farrell AO (@AusHCIndia) December 29, 2022
▶️ 96 per cent of Indian goods exports can enter Australia duty-free and,
▶️ 85 per cent of Australian goods exports can enter India duty-free. (1/2) pic.twitter.com/KYwbo90QQk
The deal with Australia could also be another step towards India’s integration with the trading network of the Regional Comprehensive Economic Partnership (RCEP). India walked out of the pact in November 2019 due to Chinese trading practices, but now has FTAs with almost all its members, except China and New Zealand.
In this respect, Goyal tweeted that the RCEP talks under the previous United Progressive Alliance (UPA) government, led by the Congress party, “would have thrown our Indian industries to unfair competition and would have meant death knell of manufacturing in India.”
“Walking out of RCEP was one of the most prudent [and] economically wise decision that India could take and the world recognised and appreciate[d] this decision as being in the best interest of India [and] the people of India,” he noted.