On November 22, 2022, the Parliament of Australia approved the India-Australia Economic Cooperation and Trade Agreement (Ind-Aus ECTA) by passing Ind-Aus ECTA Bill and the DTAA (Double Taxation Avoidance Agreement).
- Now, duties on 100% tariff lines will be eliminated.
- The agreement details were briefed by the Union Minister Piyush Goyal, Ministry of Commerce and Industry during a press conference in New Delhi, Delhi.
- Ind-Aus ECTA was signed on April 2, 2022 by Australia’s then Minister for Trade, Tourism and Investment Dan Tehan; and Union Minister Piyush Goyal.
It should be noted that the Parliament of Australia approves a free trade deal with the United Kingdom (UK) too.
Highlights of Ind-Aus ECTA:
i.With this ECTA, the bilateral trade between both nations is expected to increase to USD 45-50 billion in 5 years from the existing USD 31 billion.
- India’s Merchandise Exports are also likely to increase by USD 10 billion by 2026-27 from USD 7billion.
ii.Under the pact, Australia is offering zero-duty access to India for about 96.4% of exports (by value) covering many products of over 6,000 broad sectors that currently attract 4-5% customs duty in Australia.
- The sectors include textiles, leather, furniture, jewellery and machinery , among others.
iii.Australia will institute an Annual Visa quota of 1800 for Indian Yoga teachers and Chefs.
- There will also be post study work visa of 2-4 years for Indian students on reciprocal basis; mutual recognition of Professional Services and Other licensed/regulated Occupations; and Work & Holiday visa arrangement for young professionals.
iv.It enables cooperation across the entire gamut of bilateral economic and commercial relations between India and Australia.
v.It will provide an estimated 10 lakh employment opportunities in India.
vi.This was the third such agreement signed by India, after Mauritius and the United Arab Emirates (UAE) trade pacts.
vii.Long pending issue under Double taxation related to IT (Information Technology)/ ITES (Information Technology Enabled Services) has been resolved under this Agreement which will provide a financial savings of more than USD 200 million per year.
Date of Implementation:
With this approval, IndAus ECTA is ready for ratification to get Royal Assent from the Australia’s Executive Council, and assent from the Indian President. After that both sides will fix a date and implement the pact.
- It is expected to come into force from January 2023.
Impact of Ind-Aus ECTA:
i.It will further deepen India-Australia relationship by enhancing bilateral trade in goods and services, create new employment opportunities, raise living standards, and improve the welfare of the peoples.
ii.Labour-intensive sectors will gain immensely which include textiles and apparel, few agricultural and fish products, leather, footwear, furniture, sports goods, jewellery, machinery, and electrical goods.
iii.For the service sector in India, there will be new opportunities, including offers to students for working in Australia.
iv.In Pharmaceuticals sector, drugs approved in other developed jurisdiction will get fast track approval for patented, generic and biosimilar medicines.
v.For trade in services, Australia has offered wide ranging commitments in around 135 sub sectors covering key areas of India’s interest.
Points to be noted:
i.India and Australia are a part of the QUAD (Quadrilateral Security Dialogue between Australia, India, Japan, and the United States), Trilateral Supply Chain Initiative and the Indo-Pacific Economic Forum (IPEF).
ii.India’s goods exports to Australia stood at USD 8.3 billion and imports from India aggregated to USD 16.75 billion in 2021-22.
iii.As per Federation of Indian Export Organisation (FIEO), India’s goods exports to Australia will reach USD 15 billion by 2025 from USD 6.9 billion in 2021 while services will reach USD 10 billion by 2025 from USD 3.9 billion
iv.India is Australia’s 9th largest trading partner. This is for the first time that Australia will open 100 percent of their lines (products) with no restriction on even quota.
v.India has agreed to provide zero-duty market access to 85 percent of Australian goods, which includes – coal, sheep meat and wool, and lower-duty access to Australian wines, almonds, lentils, and certain fruits.
Recent Related News:
i.During the Bengaluru Space Expo 2022 (BSX-2022), Australia, one of the major partners in India’s space programme, inked six separate Australia-India space industry Memorandums of Understanding (MoU) to strengthen their partnership in space technology.
ii.On September 12, 2022, the Indian Naval Ship (INS) Satpura and a P8 I Maritime Patrol Aircraft of the Indian Navy reached Darwin in Australia to participate in the multinational Exercise Kakadu 2022 (KA22).
Prime Minister– Anthony Albanese
Currency– Australian dollars (AUD)