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Excellent historical bilateral ties between India and Australia have developed into a cordial alliance. Additionally strengthening this collaboration are common principles of pluralistic societies, parliamentary democracies, and commonwealth customs.
Both nations have inked a free trade agreement, which is set to take effect on December 29, 2022, in order to solidify their trade relations, expand trade opportunities, and support business along this corridor.
According to the Ministry of Commerce and Industry, India now has 13 free trade agreements (FTAs) with various nations across the world. The most recent agreement, with Australia, will help India continue to maintain a strong network of international economic cooperation.
According to the Ministry of Commerce and Industry, Australia is currently India’s 17th-largest commercial partner, and India is Australia’s 9th-largest trading partner. In 2021, commerce between Australia and India was valued at $27.5 billion in both goods and services.
After the Economic Cooperation and Commerce Agreement (ECTA) between India and Australia is ratified, it is anticipated that bilateral trade in goods and services between the two nations will increase from its current value of US$ 27.5 billion to US$ 45 billion in five years.
This FTA establishes a path of reciprocal trade advantages for both nations, allowing them to develop economic dominance in each other’s marketplaces and promote a variety of industries and services.
India will have free access to all of Australia’s tariff lines, with 98.3% of them starting on the first day and the remaining 1.7% coming later. The ECTA guarantees an institutional framework to support the expansion of trade between the two nations.
This is quite beneficial, especially for industries that require a lot of labour, such as engineering, textiles and apparel, gems and jewellery, leather, and footwear, which would otherwise be subject to a 4-5% duty in Australia.
On the other hand, India will grant Australia zero-duty access to 70.3% of its tariff lines (40.3% starting on day one and the rest 30% gradually).
The tariff discounts granted by India will enable local/domestic industries to get less expensive raw materials and increase their competitiveness as about 96% of Australia’s exports to India are raw materials and intermediate products.
Long-term, this action is anticipated to improve not just the two countries’ fiscal ties but also people’s level of living and overall well-being in both countries.
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