India-Aus trade pact in force from Dec 29
NEW DELHI: The India-Australia Economic Cooperation and Trade Agreement (ECTA) has come into force from December 29 after both partners completed all formalities, paving ways for two-way duty-free trade, the two countries officially confirmed.
India will be getting zero duty benefit on 98.3% of its exports to Australia from the Day 1, and on 100% of tariff lines within five years; tariffs on 85% of Australia’s exports to India will be eliminated immediately. The deal will benefit India’s IT industry, labour intensive sectors and students with post-study work visa.
“India & Australia consolidate their long-standing partnership. Economic Cooperation & Trade
Agreement, realised under the guidance of leaders on both countries, comes into effect from December 29, 2022. It is the dawn of a whole new era for our businesses & people,” commerce minister Piyush Goyal said in a tweet, highlighting key features such as zero duty access on 100% tariff lines and creation of 1 million additional jobs.
Australian Prime Minister Anthony Albanese on Wednesday called the agreement another step towards strategic relationship between two partners. “Australia and India are increasingly working together as strategic and economic partners… The Australia-India Economic Cooperation and Trade Agreement is the next step in elevating our relationship with India, the world’s fastest growing large economy,” he said.
An Australian government statement said: “From 29 December, tariffs on 85% of Australia’s exports to India will be eliminated and high tariffs on a further 5 per cent of goods will be phased down.”
“Entry into force of the agreement before the New Year deliv
INDIA WILL BE GETTING ZERO DUTY BENEFIT ON 98.3% OF ITS EXPORTS TO AUSTRALIA FROM THE DAY 1, AND ON 100% OF TARIFF LINES WITHIN FIVE YEARS
ers a double bonus of two tariff cuts in quick succession: one as the agreement comes into effect and a second on 1 January 2023,” it added.
Australian trade minister Don Farrell said businesses have to prepare themselves now to take advantage of the substantial improvements in market access to India under the new agreement. “The ECTA’s two tariff cuts in quick succession intensify the up-front benefits of this agreement for our exporters,” he added. The deal, signed on April 2, is India’s first trade deal in a decade with any developed country.
Australia finalised its domestic requirements for the trade agreement last week with the unanimous passage of government bills through both houses of Parliament. “The date is set! The Economic Cooperation and Trade Agreement will enter into force on 29 December, delivering new market access opportunities for both countries & securing the [Australia-India] friendship in the decades to come,” Australian high commissioner Barry O’Farrell tweeted.
Indian officials have said the deal is expected to take two-way trade to $45 billion to $50 billion in five years from the existing $31 billion, with India’s merchandise exports to Australia expected to jump $10 billion by 2026-27 from $7 billion. Twoway trade also has the potential to create more than a million additional jobs in India, besides increasing remittance flows to the country, they said.
ECTA will save Australian exporters around $2 billion a year in tariffs, while consumers and business will save around $500 million in tariffs on imports of finished goods, and inputs for Australia’s manufacturing sector, the Australian government’s statement said.
Tariff commitments provided by India in the deal will open up access for Australia’s exports such as critical minerals, pharmaceuticals, cosmetics, lentils, seafood, sheepmeat, horticulture and wine.
Australian service suppliers will benefit from full or partial access across more than 85 Indian services sectors and subsectors. Australian suppliers across 31 sectors and sub-sectors will be guaranteed the highest standard of treatment that India grants to any future free trade agreement partner.
Australian services sectors that will benefit include higher education and adult education, and business services such as tax, architecture and urban planning.
ECTA will also support tourism and workforce needs in regional Australia by offering 1,000 work and holiday program available to young Indians. It will also allow Indian students graduating in Australia to undertake post-study work, with a bonus year of stay for high-performing STEM graduates.
India and Australia are working on a Comprehensive Economic Cooperation Agreement to build on ECTA. “The Australian government is pursuing further opportunities in goods and services, in addition to new commitments in areas such as digital trade, government procurement, and new areas of cooperation,” the statement said.
India is Australia’s ninth largest trading partner, and the balance of trade is in Australia’s favour. During 2021, two-way trade in goods and services was worth $27.5 billion, with India’s exports valued at $10.5 billion and imports at $17 billion.
India’s merchandise exports to Australia grew 135% between 2019 and 2021. The main exports to Australia are refined petroleum, pharmaceutical products, pearls and gems, jewellery, made-up textile articles and women’s clothing, while India’s major imports were coal, copper ores and concentrates, natural gas, ferrous and non-ferrous waste and scrap.