The interim free trade agreement (FTA) between India and Australia comes into force today with the hope to double the bilateral trade and commerce to $45-50 billion in five years.
The India-Australia FTA will provide duty-free access to thousands of domestic goods such as textiles and leather in Australia which, according to Federation of Indian Export Organisations (FIEO) Vice-President Khalid Khan, is one of the key markets for Indian exporters.
Here’s all you need to know about the India-Australia bilateral FTA:
The Economic Cooperation and Trade Agreement (ECTA) signed on April 2 would provide duty-free access to Indian exporters of over 6,000 broad sectors, including textiles, leather, furniture, jewellery and machinery in the Australian market.
Besides providing cheaper raw materials to many sectors, including steel and aluminium from Australia, the ECTA would also facilitate increased investments from Australia and will support Indian manufacturing.
ECTA will provide easy access to Australian projects for the IT sector, allow dual degree education programs between the two countries, and will boost textile sector exports -employing 40,000 people per annum.
Labour-intensive sectors which would gain immensely include textiles and apparel, a few agricultural and fish products, leather, footwear, furniture, sports goods, jewellery, machinery, and electrical goods.
Under the pact, Australia is offering zero-duty access to India for about 96.4 percent of exports (by value) from the Day 1. This covers many products that currently attract 4-5 percent customs duty in Australia.
India’s goods exports to Australia stood at $8.3 billion and imports from the country aggregated to $16.75 billion in 2021-22. Tariffs on 85 percent of Australia’s exports to India will be eliminated from December 29.
The agreement is expected to lead to $10 billion jump in India’s merchandise exports by 2026-27 and would help in creating additional 10 lakh jobs in India and more job opportunities in Australia, according to CII.
India is providing zero-duty access to Australia for 70.3 percent of its tariff lines (40.3 per cent tariff lines from Day 1 and the remaining 30 percent in a phased manner), CII said.
According to a report released by Global Trade Research Initiative (GTRI), products worth $23 billion will become duty-free from Day One of implementation of the trade deal.
India has offered zero duty access on coal, alumina calcined, manganese ore, copper concentrates, bauxite, sheep meat, rock lobster, macadamia nuts, cherries, and wool.
The Directorate General of Foreign Trade (DGFT) has notified the procedure for allocation of tariff rate quotas (TRQ) for certain products, including lentils, oranges and pears under the agreement.
Sanjay Budhia, Chairman – CII’s National committee on EXIM and Managing Director of Patton International Ltd, said that Australia and India are increasingly working together as strategic and economic partners.
“The India-Australia ECTA is a ground-breaking agreement that will leverage the industry to capitalize the enormous untapped potential. The agreement is expected to boost investments, enhance market access, create additional job opportunities, and most importantly strengthen the bilateral ties of two important players in the Indo-Pacific region,” he said.
Source: Money Control
