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.
