India, Australia strike interim free-trade deal
NEW DELHI: India and Australia on Saturday signed a comprehensive interim free-trade agreement that will provide zero duty exports to 100% tariff lines from India to the Australian market, benefiting labour-intensive sectors besides providing greater access to the services space.
Liberalised visa norms for students and professionals, including quota for Indian chefs and yoga teachers, is among the highlights of the deal, which will cut tariffs on billions of dollars of commerce as the two countries boost their relations.
Tariffs will be eliminated on more than 85% of Australian goods export to India, which will rise to about 91% over 10 years. While 97% of Indian goods will immediately gain preferential access to Australia after the agreement is operationalised, the rest will happen in the next five years, according to officials.
Commerce minister Piyush Goyal said both countries have been “very fair and reasonable” in terms of local sensitivities related to trade in goods and services “and, therefore, I believe this is a win-win agreement” for the two partners.
India kept several sensitive products in the exclusion category such as milk, dairy products, chickpeas, walnut, pistachio nut, wheat, rice, bajra, apple, sunflower seed oil, sugar, oil cake, gold, silver, platinum, iron ore and most medical devices.
The pact was signed by Goyal and his Australian counterpart Dan Tehan at a virtual ceremony on Saturday in the presence of Prime Minister Narendra Modi and Australian Prime Minister Scott Morrison.
“This is a watershed moment for our bilateral relations,” Modi said. “On the basis of this agreement, together, we will be able to increase the resilience of supply chains, and also contribute to the stability of the Indo-pacific region,” he added.
Through the agreement, India will get cheaper raw materials for steel, aluminium and textile industry from Australia for value addition. The agreement, however, restricts imports of cotton, particularly the small staple kind that is grown in India.
Modi said the “people to people” relation is the key pillar of the ties between India and Australia.
“This agreement will facilitate the exchange of students, professionals, and tourists between us, which will further strengthen these relations,” he said.
Under the agreement, Australia has given an annual quota of 1,800 for qualified Indian traditional chefs and yoga teachers. The pact also allows post-study work visa of two to four years for Indian students on reciprocal basis.
Currently, over 100,000 Indian students are enrolled in Australian institutes.
Australia has offered concessions in services that would help India’s information technology (IT) sector, business services, health, education, and audio-visual sectors.
India reciprocated in areas such as business services, communication services, construction and related engineering services.
Speaking about the scope of the agreement, Goyal said the pact will double the bilateral trade between the two countries from the existing $27 billion in the next five years and create about one million jobs in India. India’s merchandise exports are mainly finished products and they totalled $6.9 billion in 2021, while imports from Australia were largely raw materials and intermediary goods such as coal worth $15.1 billion that year.
The India-australia ECTA is the first trade agreement of India with a developed country after more than a decade, Goyal said.