There is a new dawn in the relationship between India and Australia as the much-negotiated Economic Corporation and Trade Agreement came into force on December 29. The treaty was signed in April 2022.
Speaking on the occasion, Union Commerce and Industries minister Piyush Goyal said, “Earlier in May, India entered into a trade agreement with the UAE and now with Australia. Now we have entered into a trade agreement with two countries within a calendar year, it is a matter of great joy and celebration.”
Sharing the details of the deal, Goyal said that the agriculture sector was kept out of the agreement, keeping in mind the sensitivity of Indian farmers.
“Agriculture and dairy sectors, which are very sensitive for Indian farmers, have been kept out of the agreement. It is the first time that Australia has an FTA without dairy. The Australian government was very interested in understanding our dairy sector as many small farmers are dependent on dairy in India, which will not be able to compete with other markets,” Union minister Goyal said.
The transaction is expected to increase market potential in a wide range of industries, including pharmaceuticals, textiles, chemicals, gems and jewelry, leather, sportswear, engineering goods, and furniture.
“It is a win-win deal for India and Australia as Australia is largely a raw material and intermediary goods producing country, so there is a huge opportunity to sell finished Indian items in the Australian market,” Goyal said.
“On the other hand, we will receive cheaper raw materials for Indian industry, which will help us become more compatible and serve the world market and Indian consumers with better quality goods at a more competitive price,” he added.
The production of finished goods for import into the Australian market is expected to employ 10 lakh Indians. The agreement will also eliminate double taxation on IT services.
Speaking about the 2019 Regional Comprehensive Economic Partnership (RCEP) trade agreement, the Union minister said that it was a wise decision not to enter into it as it just meant a Free Trade Agreement with China, which was not in the interests of the Indian market.
“Today, with entering into the trade agreement with Australia, we have entered into a trade agreement with all RCEP member countries except New Zealand,” he said.
Explaining the details of the agreement, Tapan Mazumder, joint secretary, of the Commerce ministry, said, “India-Australia trade, which is now around $31 billion, is expected to rise to $45 to $50 billion with the signing of this trade deal.”
“The merchandise exports of India are going to increase from the present $6.7 billion to $10 billion in the coming 5 years,” Mazumder added.
“All the exports will be subject to zero per customs charges, which were earlier 5 per cent. India will have 100 per cent duty-free access to the Australian market, 98 per cent of which will start from the very first day of the agreement,” Mazumder said.
“For India, the ECTA with Australia is the first agreement with a developed economy in the world after more than a decade. Australia is also the third OECD country after Japan and South Korea with which India has signed a Free Trade Agreement (FTA),” Rajesh Aggarwal, Secretary of the Ministry of Skill Development and Entrepreneurship.