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India Australia sign a historic trade agreement to boost economic ties

Tags: International News

India and Australia signed an historic trade  agreement on 2 April to give a boost to trade and investment between the two countries. The  India-Australia Economic Cooperation and Trade Agreement (“IndAus ECTA”) was signed virtually in the presence of the Indian Prime Minister Narendra Modi and the Australian Prime Minister Scott Morison.

• The  agreement was signed by Shri Piyush Goyal, Union Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution and  Textiles, Government of India and Mr. Dan Tehan, the Minister for Trade, Tourism and Investment, Government of Australia in a virtual ceremony.

• It is an interim trade deal which will be gradually converted into a  Comprehensive Economic Cooperation Agreement (CEPA). This is the second such agreement signed by India with a froeign country after a similar agreement was signed with the United Arab Emirates in March 2022.    

Highlights of the trade deal

• More than  95% of roughly 12,000 Indian goods will get duty-free access to the Australian market.

•  In the next five years  the agreement will be expanded  to cover 100% Indian goods. 

• About 70% of Australian products will get duty-free and concessional access to the Indian market.This will be increased to cover 85% of goods in 10 years.

• Indian exporters in critical sectors, especially labour-intensive ones like agriculture, textiles & garments and pharmaceuticals will get duty-free access to the Australian market. 

•  India  will also get greater access to about 100 services.  The deal also  ensures freer movement of skilled professionals from India. 

• India  has allowed import of premium Australian wine at a concessional rate. 

•  India has kept the dairy sector out of the trade deal.

India Australia Trade 

• India had a merchandise trade deficit of $7.2 billion with Australia in the first ten months of  2021-22. Its exports were  $6.3 billion, while its imports from Australia stood at $13.5 billion. 

• The major items imported by India from Australia  are  coals, pearls ,precious stones ,woods and its products.

• Major exports by India to Australia include petroleum products, gems and jewellery, textiles and apparels, engineering goods, leather, chemicals .

• Australia is the 17th largest trading partner of India and India is Australia’s 9th largest partner.

•  Bilateral trade in goods and services stood at USD 27.5 billion in 2021.

Importance of india for Australia 

Both India and Australia apart from the United States and Japan  are part of the QUAD  group. The QUAD is seen as an anti-China alliance. 

The Australian- China relationship has suffered a serious setback in the past couple of years and China has imposed sanctions on Australian products including wine, lobster and coal.

India is one of the fastest major economies in the world  and is seen as a major market for Australian products.