Shri Piyush Goyal, Union Minister of Commerce and Industry, India and Mr. Dan Tehan, Minister for Trade, Tourism, and Investment, Government of Australia, agreed to sign the India-Australia Economic Cooperation and Trade Agreement, “IndAus ECTA” on April 2nd, 2022. The “IndAus ECTA”, which covers both goods and services trade, is a balanced and equitable trade agreement to strengthen the two countries' already close strategic ties by significantly increasing bilateral trade in goods and services, creating new job opportunities, raising living standards, and improving the general welfare of their people.
According to the terms of the agreement, India and Australia have already completed an early harvest deal, which aims to reduce tariffs on some items traded between two nations or trading blocs before a comprehensive free-trade agreement is reached.
Under the agreement, Canberra will provide tax-exempt access to India for about 96.4 per cent (in value) of exports from day one. This is true for many products that currently have a 45 per cent obligation in Australia. India, on the other hand, provides duty-free access to more than 85 per cent of Australia's tariff lines, covering metal ores such as coal, sheep, wool, LNG, coal, alumina, manganese, copper and nickel, titanium and zirconium. India has also agreed to reduce tariffs on Australian wines, as tariffs on shipments with a minimum import price of $5 per bottle will be reduced from 150 per cent to 100 per cent, and tariffs on $15 bottles will be reduced to 75 per cent. As part of the transaction, Australia has also agreed to solve the double taxation problem faced by domestic IT companies in this market as well. In addition, Australian regulatory agencies have agreed to use inspection reports and approvals from Canada and the EU in the evaluation process for Indian medicines and manufacturing sites, and this agreement will result in the Australian regulatory agency in India, and allows for faster approval of medicines. ECTA can also grant STEM (Science, Technology, Engineering, Mathematics) Indian graduates a long-term graduate work visa.
In the sphere of vital minerals, the two countries will sign a Memorandum of Understanding (MoU) that will enable India to gain access to metallic coal and lithium in Australia. Australia is also reported to announce a Rs 1,500 crore investment in India across different industries, which will be the Australian government's largest-ever investment in India. This will be followed by a visit to Australia by India's Union Minister of Coal and Mines, Pralhad Joshi. The deal also offers a tariff concession on Australian imports, but India has succeeded in protecting its dairy sector from tariff cuts. Some items are in the exclusion category and no preferential tariffs are levied on imports from Australia. These products include milk and dairy products, chick beans, walnuts, pistachios, wheat, rice, vajra, apples, sunflower seed oil, sugar, oil cake, gold, silver, platinum, jewelry, iron ore, and most medical equipment.
The agreement is expected to increase bilateral trade in goods and services from approximately $27 billion to $4.55 billion over five years, creating more than one million jobs in India, according to a government statement. It has been. As Australia's exports to India become more focused on commodities and intermediates, many industries in India will receive competitive and cheap commodities, especially in sectors such as steel, aluminum and textile/apparel. In addition, ECTA provides tax exemption access to India, so it enjoys more market access, which would enhance India's export momentum. Relaxation of the regulatory process in the pharmaceutical sector will give India access to Australia's attractive $12 billion sector.
This agreement emphasizes how important bilateral connections are to both countries, as well as their close cooperation on regional and global challenges. The early harvest agreement would help to strengthen the countries' trade and investment connections while also opening up new economic prospects to support mutual economic recovery and prosperity. Strengthened collaboration in defence and security, research and technology, vital minerals, and sustainable energy is at the heart of these efforts. Ultimately, it also emphasizes that the two countries' strong bilateral relationship is built on a common goal of an open, inclusive, and resilient Indo-Pacific.
This is co-authored by Kaustubh Mishra and Devika Chawla.