28-Nov-2022
India and Australia have finally reached an interim free trade agreement after ten years of discussions. In the following five years, it is anticipated that commerce between Australia and India will more than double thanks to the Economic Cooperation and Trade Agreement (ECTA). "The agreement, once implemented, will provide duty-free access to the Australian market for over 6,000 broad sectors of India, including textiles, leather, furniture, jewellery and machinery," industry body CII stated. In this article, we will discuss the India-Australia Trade Agreement.
After ten years of negotiations, India and Australia have finally agreed on an interim free trade deal. Due to the Economic Cooperation and Trade Agreement, it is predicted that trade between Australia and India will more than treble over the next five years (ECTA), Businesses from both countries will have a variety of options thanks to the India-Australia Economic Cooperation and Trade Agreement, which was approved by the Australian parliament on Tuesday.
When the agreement is put into effect, "almost 6,000 broad sectors of India's economy, including textiles, leather, furniture, jewellery, and machinery, will have duty-free access to the Australian market," according to industry group CII.
With the trade deal, India will become more competitive in other markets thanks to lower imports of intermediate goods and raw materials. Additionally, it will assist Indian customers in finding goods and services at affordable prices and encourage businesses to hire Indian students who are studying abroad.
The IT industry will benefit the most from the agreement, said CII. "The FTA would also have a significant positive impact on India's pharmaceutical sector. Medicines that have been through rigorous US and UK approval processes will now be given priority in the Australian regulatory system.
According to FICCI Director General Arun Chawla, this agreement will create about a million jobs in India by opening doors to opportunities in a variety of industries, including mining and minerals, pharmaceuticals, healthcare, education, clean energy, transportation, gems and jewellery, tourism, and textiles.
Additionally, he said, there are great opportunities for cooperation between India and Australia in a number of crucial fields, including cyber technology, key minerals, water resources, training and education, and the circular economy.
Deepak Sood, the secretary general of Assocham, predicted that the FTA would increase investment and trade between the two largest economies in the world, expanding employment opportunities in a number of industries that are conducive to employment, including engineering, textiles, leather, gems and jewellery, sports equipment, and engineering services.
The Australian Parliament ratified the free trade deal between India and Australia on Tuesday, and the two countries will now implement it at a mutually convenient time.
India's current 17th-largest trading partner in Australia and Australia's current 9th-largest trading partner is India. In 2021, bilateral commerce between India and Australia in goods and services was worth US$ 27.5 billion. India's exports of goods to Australia increased by 135 percent between 2019 and 2021. India exported goods of US$ 6.9 billion in 2021, the majority of which were completed goods.
In 2021, India imported commodities from Australia worth approximately $15.1 billion, primarily in the form of raw materials, minerals, and intermediate products. Coal makes up three-fourths of Australia's total imports to India.
Considering the size of both India's and Australia's economies, there is room for enormous growth in bilateral commerce if both countries can get better access to each other's markets. India currently has a disadvantage compared to other nations that have free trade agreements with Australia, such as China, Thailand, Vietnam, South Korea, Indonesia, Malaysia, and Japan, because exports from India are subject to a 4-5% import charge. India will be able to compete with these nations' goods to Australia thanks to the deal.
India exports mostly consumer and manufactured goods to Australia. India will primarily profit from Australia's tariff liberalisation and the fast-track approval of pharmaceutical products. Australia is granting zero-duty access to all tariff lines coming from India, and zero-duty will be applied right away to exports worth 96.4% of the value of India. This indicates that beginning on the day the Agreement enters into force, Indian exporters will have instant duty-free access to those markets.
Currently, most of these goods—including the majority of textiles and apparel, a few agricultural and fish products, leather, footwear, furniture, and sporting goods, jewellery, machinery, electrical goods, railway waggons, some pharmaceutical products and medical devices, furniture, etc.—attract a 4-5% import duty in Australia. In the next five years, the charge will be eliminated on 113 tariff items that make up 3.6% of exports.
Additionally, since Australia supplies a substantial portion of India's raw materials and intermediates, many Indian businesses will benefit from cheaper raw materials, increasing their competitiveness, particularly in industries like steel, aluminium, fabric/garments, etc.
Due to the import concessions granted by any free trade agreement, the issue of protecting the domestic industry still exists. A number of clauses are included in the Indo-Australian Agreement to safeguard domestic business and avoid agreement abuse. In order to restrict the shipment of goods from a third nation, IndAus ECTA includes strict regulations of origin for items. It will need to be processed in-depth on the territory of the Parties. For the first time, India has considered a developed country like Australia to agree to the condition of “melt and pour” as Product Specific Rules for Steel products. ExportImportData offers trustworthy Export Import Data. You can also get information from it on the biggest foreign importers and exporters, trade data, etc. If you have any inquiries concerning foreign Import Export Data, we are here to help you grow your business.
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