INDIA AUSTRALIA ECONOMIC COOPERATION AND TRADE AGREEMENT

  • It helps matters that Australia exports largely raw materials to India, while India exports finished goods. The ECTA builds on this complementarity, creating win-win opportunities for the two countries.
  • The coming into force of Ind – Aus ECTA brings together two major economies of the world – India the 5th largest economy and Australia the 14th largest economy.
  • Since the trade between the two countries is hugely complementary, this offers opportunities on both sides and will pave the way for a win-win solution for both India and Australia.”

Current trade trends between India and Australia

  • India’s imports from Australia amount to 17 US $ billion while its exports to Australia amount to 10.5 US $ billion. However, what we need to realize that India’s imports from Australia are primarily (96%) raw materials & intermediate goods.
  • They are highly concentrated in Coal (74% of Australia’s exports to India) out of which 71.4% is coking coal. On the other hand, India’s exports to Australia are broad-based and dominated by finished products (consumer goods).
  • India also spends $ 4 bn approx. each year on education of students in Australia.
  • The above composition of our bilateral trade is very well reflected in the statements made by the Union Commerce and Industry Minister Piyush Goyal, during the event held in Mumbai on December 29, 2022, the day the agreement came into force.
  • “There is a lot of potential for exporting finished goods to Australia, since they hardly manufacture anything, they are largely a raw material and intermediate producing country, we will get cheaper raw materials which will not only make us more competitive globally but also enable us to serve Indian consumers better; enabling us to provide more quality goods at more affordable prices.”
  • “Australia, which is largely dependent on imports, will benefit hugely, they will soon start seeing a lot more finished goods coming in from India, providing huge amount of work and job opportunities in both goods and services, provided by Indian talent.”

The #IndAusECTA covers the following major areas:

  1. Trade in Goods
  2. Trade in Services
  3. Rules of Origin
  4. Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary (SPS) measures
  5. Customs Procedures and Trade Facilitation
  6. Trade Remedies
  7. Legal & institutional Issues
  8. Movement of Natural Persons

Benefits under Trade in Goods

  • Indian goods on all tariff lines to get access to Australian market with zero customs duty
  • The Agreement will benefit various labor-intensive Indian sectors that are currently subjected to 5% import duty by Australia.
  • The agreement will result in immediate market access at zero duty to 98.3% of tariff lines accounting for 96.4% of India’s exports to Australia in value terms.
  • The remaining 1.7% lines are to be made zero duty lines over 5 years. Overall, Australia is offering duty elimination on 100% of its tariff lines.

Cheaper Raw Materials, Faster ApprovaI for Medicines

  • Immediate duty-free access covers all labour-intensive sectors such as Textiles and Apparel, Agricultural and Fish products, Leather, Footwear, Furniture, many Engineering Products, Jewelry and select Pharmaceuticals.
  • As a result, many industries such as steel, aluminium, garments and others will get cheaper raw materials which will enable them to become competitive.
  • Both sides have also agreed to a separate Annex on Pharmaceutical products under this agreement, which will enable fast-track approval for patented, generic and biosimilar medicines.

90% of Australian exports by value to get zero duty access to Indian market

  • India is offering zero duty access to 90% value of products from Australia (including coal). Zero duty on 85.3 % value of products will be offered immediately while zero duty on 3.67 % value of products will be offered progressively over 3, 5, 7 and 10 years.
  • India has offered concessions on Tariff lines of export interest to Australia like Coking coal and Thermal coal, Wines, Agricultural products – 7 of them with TRQ (Cotton, Almonds shelled and in shell, Mandarin, Oranges, Lentils, Pear), Metals (Aluminium, Copper, Nickel, Iron & Steel) and Minerals (Manganese Ore, Calcined Alumina). Many sensitive products such as milk and other dairy products, wheat, sugar, iron ore, apple, walnuts and others, have been kept in India’s Exclusion list.

 

SOURCE: THE HINDU, THE ECONOMIC TIMES, PIB

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