PERSPECTIVES
India-Australia Trade Pact: An Opportunity to Unlock Potential After signing the historic Economic Cooperation and Trade Agreement (ECTA), India and Australia are looking to further bilateral trade and economic ties by converting this into a CECA towards the end of 2022. A look at the key sectors that could benefit. BY DR. JAVERIA MARYAM & ANGANA PARASHAR SARMA
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ndia and Australia signed a historic Economic Cooperation and Trade Agreement in early April, 2022 and are looking forward to furthering bilateral trade and economic ties by signing a Comprehensive Economic Cooperation Agreement (CECA) towards the end of this year. Notably, this is the first trade agreement of India with a developed country after over a decade. Through the ECTA, India stands to benefit from preferential market access provided by Australia on 100% of its tariff lines. This encompasses a number of labourintensive sectors like gems and jewellery, textiles, leather, footwear, furniture, food, and agricultural products, engineering products, medical devices, and automobiles. India will also give preferential access to Australia on over 70% of its tariff lines, including key products of interest such as coal, mineral ores and wines, as reported by the release of the Department of Commerce, Government of India.
In the realm of services, Australia has offered commitments in around 135 sub sectors and Most Favoured Nation (MFN) in 120 sub sectors. India’s interests are covered in sectors like IT, ITeS, business services, health, education, and audio visual. Provisions include quota for chefs and yoga teachers; post-study work visa of 2-4 years for Indian students on reciprocal basis; mutual recognition of professional services and other licensed/ regulated occupations; and work & holiday visa arrangement for young professionals. The Australian Government has highlighted to invest over US$ 280 million in India. Also, to broaden the Australia-India Strategic Research Fund for Australia-India Innovation and Technology Challenge, Australia has committed US$ 17.2 million. The Australian Government has affirmed its commitment to the India Economic Strategy and its ambitious goal is to make India one of its top 3 export markets by 2035.
12 | India Business & Trade • Apr-May, 2022
STATUS OF BILATERAL TRADE With India rising as one of the fastest-growing consumer markets, Australia is expected to be an ideal strategic partner. It is the 13th largest economy in the world in terms of GDP and has a stable economic environment as compared to other developed economies. As per data from the Ministry of Commerce and Industry, India’s exports to Australia were recorded at US$ 4.04 billion in fiscal 2020-21, increasing to US$ 6.33 billion during April-Jan 2022. However, India has a trade deficit with Australia with imports worth US$ 13.5 billion during April-Jan 2022. This trade deal is expected to significantly reduce the trade gap. Growth in trade between India and Australia has been on account of their growing complementarities. India’s key imports from Australia include minerals, gems and jewellery items and inorganic chemicals; while its key exports include minerals, gems and jewellery, pharmaceutical products, railway equipment and machinery.
