The trade deal between India and Australia is all set to become operational before the year ends. It will come into force on December 29, after India has fulfilled all its domestic requirements which would enable the implementations.
Once the agreement is operational it will benefit the students, labour intensive sectors, IT industry and more in India.
This is India’s first trade deal with any developed country in a decade. On Wednesday (Nov 30, 2022), the government of Australia welcomed India’s confirmation that all requirements have all been completed for the implementation of the Economic Cooperation and Trade Agreement (ECTA). As reported earlier, this agreement was inked earlier this year on April 2.
The implementation of the ECTA on Dec 29 will come ahead of the expected visit of Australia’s Prime Minister Anthony Albanese in the first quarter of 2023. Earlier this month the Australian Parliament had ratified the trade agreement. According to an official Australian government statement, once the agreement is implemented on Dec 29, it will lead to two tariff cuts by January 1, 2023. This means starting Dec 29, tariffs on around 85 per cent of Australia’s exports to India are set to be eliminated. And high tariffs on a further 5 percent of goods will be phased down.
About the agreement
Reports in the public domain quoting Indian officials have said that the deal will help in increasing the bilateral trade to almost $ 45-50 billion over the next five years from the existing $ 31. Also the export of Indian goods to that country is expected to go up to $ 60 billion by 2026-27 from the present $7 billion.
What does this mean?
It means that once the two way trade increases more jobs will be created in India and an increase in inflow of remittances from there is expected to go up.
This agreement will help the exporters from Australia to save up to $2 billion annually in tariffs and around $500 million in tariffs will be saved by the consumers and business on imports of finished goods. Also inputs for the manufacturing sector in Australia.
Tariff commitments which India has provided in the ECTA will lead to opening up access for Australia’s exports of critical minerals, wines, lentils, seafood, horticulture, cosmetics, pharmaceuticals, and sheep meat.
Service suppliers from that country will also benefit from full or partial access to more than 85 Indian services sectors and sub-sectors. And also, suppliers across 31 sectors and sub-sectors from Australia are guaranteed the highest standard of treatment that India extends to any future free trade agreement partner.
Various sectors including higher education, adult education, urban planning, business services such as tax and architecture in Australia are expected to benefit from the ECTA.
This agreement will also support tourism and workforce requirements in regional Australia and will offer around 1000 work and holiday programmes to young Indians. And like other countries in Europe will allow the students from India to undertake post-study work and with a bonus year of stay for higher performing STEM graduates.
Financial Express Online has reported earlier, to build on the ECTA both India and Australia are working on a Comprehensive Economic Cooperation Agreement.
The official statement from Australia states, that in addition to the new commitments in areas like digital trade, government procurement, and other areas of cooperation, the government is pursuing further opportunities in goods and services.
Australia’s PM says
“Australia and India are increasingly working together as strategic and economic partners…The Australia-India Economic Cooperation and Trade Agreement is the next step in elevating our relationship with India, the world’s fastest-growing large economy.”
India – Australia Bilateral trade
In 2021, two way trade in goods and services was worth $27.5 billion, India’s exports touched $ 10.billion and imports at around $17 billion.