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One Year of India-Australia ECTA |

One Year of India-Australia ECTA

Context

∙ The India-Australia Economic Cooperation and Trade Agreement, recently completed one year.

About

∙ Negotiations are also underway for concluding the Comprehensive Economic Cooperation Agreement between the two countries but there is no defined deadline at the moment.

India-Australia Economic Cooperation and Trade Agreement:

∙ The ECTA is a bilateral free trade agreement signed between India and Australia on December 2, 2022. It came into effect on December 29, 2022.

Objectives:

∙ Boost bilateral trade and investment: Removing tariffs and trade barriers aims to increase trade volume and create opportunities for businesses in both countries.

∙ Enhance market access: The agreement provides preferential access for Indian and Australian goods and services in each other’s markets.

∙ India has agreed to Negative listing after 5 years of coming into force of the Agreement.

∙ Streamline customs procedures: Simplifying customs processes aims to save time and costs for businesses involved in cross-border trade.

∙ Promote regulatory cooperation: ECTA encourages harmonization of technical standards and regulations between the two countries.

Expected benefits for India

∙ Duty-free access for 96.4% of India’s exports to Australia: This includes key sectors like textiles, agriculture, and leather products.

∙ Exports: Exports are expected to increase by 10 billion by 2026-27 and the total bilateral trade is expected to cross US $ 45-50 billion by 2035.

∙ Increased job creation: Increased trade is expected to generate approximately 10 lakh new jobs in various sectors in India.

∙ Greater foreign investment: Improved market access and a more predictable regulatory environment could attract more foreign investment into India.

∙ Closer economic ties with Australia: ECTA strengthens the economic partnership between India and Australia, opening up new avenues for collaboration.

Achievements so far

∙ According to official data, India’s exports to Australia grew 14% year on year in value terms to $5.87 billion between April and November 2023 while imports contracted 19% year on year to $11.46 billion in the period.

∙ The trade deficit between the two countries was $5.2 billion between April and November 2023 as against $8.6 billion in the corresponding period a year ago.

∙ Exports to Australia on preferential lines grew by 17.8% in the same period and grew by 15.14% on non-preferential lines.

∙ Meanwhile, agricultural exports to India from Australia are 50% higher since the trade agreement came into force.

Way Ahead

∙ While ECTA presents promising opportunities, some challenges remain, such as differences in regulatory standards and potential implementation issues.

∙ Continued dialogue and collaboration between both countries are crucial to maximize the benefits of the agreement.

∙ Its successful implementation could pave the way for further cooperation and contribute to regional economic growth and development.

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