India and Australia will enter into a free trade agreement on December 29, which will help nearly double bilateral trade in around five years to USD 45-50 billion.
“The government of (Anthony) Albanese welcomes the confirmation today that the Indian Government has completed its domestic requirements to facilitate the implementation of the Australia-India Economic Cooperation and Trade Agreement (ECTA),” Don Farrell, the Minister for Trade and Tourism, stated on Wednesday.
From 29 December 2022, the agreement will provide new opportunities for Australian businesses and consumers.
Piyush Goyal, the minister of commerce and industry, indicated that the implementation of the free trade agreement heralds the dawn of a new era.
The long-standing partnership between India and Australia is being strengthened. As a result of the guidance provided by the leaders of both countries, the Economic Cooperation & Trade Agreement is set to take effect on December 29, 2022. A new era has dawned for our businesses and people,” Goyal tweeted.
As a result of this agreement, Indian exporters in over 6,000 broad sectors will be able to access the Australian market duty-free, including textiles, leather, furniture, jewellery and machinery.
A number of labor-intensive sectors would benefit greatly, including textiles and apparel, some agricultural and fishery products, leather, footwear, furniture, sports goods, jewellery, machinery, and electrical goods.
In accordance with the agreement, Australia will offer India zero-duty access to its exports (by value) as of the first day of the program. As a result, many products currently subject to Australian customs duties of four to five percent are covered by this policy.
A total of USD 8.3 billion in goods were exported by India to Australia in 2021-22, while USD 16.75 billion was imported from the country.
A statement from the Australian government stated that from 29 December, tariffs on 85 percent of Australia’s exports to India would be eliminated and that high tariffs on an additional 5 percent of goods would be phased out.
According to the report, once the agreement enters into force before the New Year, two tariff cuts will be implemented in quick succession: one as soon as it becomes effective and the second on 1 January 2023.
In addition, the ECTA will reduce tariffs on Australian exports by around USD 2 billion a year, while consumers and businesses will be able to save around USD 500 million on tariffs on imports of finished goods and inputs into “our manufacturing sector”.
According to the statement, the tariff commitments made by India in the agreement will allow Australia’s exporters access to products such as critical minerals, pharmaceuticals, cosmetics, lentils, seafood, sheepmeat, horticulture, and wine.
Furthermore, it stated that Australian suppliers of services will benefit from access to more than 85 Indian service sectors and subsectors. Across 31 sectors and subsectors, Australian suppliers will be guaranteed the same level of treatment as any future free trade partner of India.
By providing 1,000 work and holiday programme places to young Indians, ECTA will also support tourism and workforce needs in regional Australia. The pact maintains the possibility of Indian students graduating in Australia to take up post-study work, with a bonus year for graduates who excel in STEM fields.
A Comprehensive Economic Cooperation Agreement is currently being negotiated between Australia and India in order to build on ECTA. As well as new commitments in areas such as digital trade, government procurement, and new areas of cooperation, the Australian Government is exploring new opportunities in goods and services.
The Australian Prime Minister Anthony Albanese said that the agreement is the next step in elevating Australia’s relationship with India, the world’s fastest growing major economy.
Don Farrell, Minister of Trade and Tourism, stated that the ECTA’s two tariff cuts in rapid succession intensified its immediate benefits for exporters.
The new agreement provides substantial improvements in market access to India for businesses, and they should get on the front foot and prepare themselves now to take advantage of these improvements. The Australian Trade Commission can assist existing and potential exporters in gaining access to the Indian market by reducing trade barriers,” he explained.
Free Trade Agreement (FTA)