Why in News?
- IndAusECTA was signed last year, on 2ndApril, 2022; after Ratification and Exchange of Written Instruments, the Agreement has come into force on 29th December 2022.
Current trade trends between India and Australia:
- India’s imports from Australia amount to 17 US $ billion while its exports to Australia amount to 10.5 US $ billion. However, what we need to realize that India’s imports from Australia are primarily (96%) raw materials & intermediate goods. They are highly concentrated in Coal (74% of Australia’s exports to India) out of which 71.4% is coking coal. On the other hand, India’s exports to Australia are broad-based and dominated by finished products (consumer goods). India also spends $ 4 bn approx. each year on education of students in Australia.
The IndAusECTA covers the following major areas:
- Trade in Goods
- Trade in Services
- Rules of Origin
- Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary (SPS) measures
- Customs Procedures and Trade Facilitation
- Trade Remedies
- Legal & institutional Issues
- Movement of Natural Persons
Benefits under Trade in Goods:
- Indian goods on all tariff lines to get access to Australian market with zero customs duty
- Cheaper Raw Materials, Faster ApprovaI for Medicines
- 90% of Australian exports by value to get zero duty access to Indian market
- 10 Lakh More Jobs, 10 Billion Dollar More Exports in Five Years
Benefits under Trade in Services:
- More than 1 lakh Indian students in Australia to benefit from post-study work visa
- Australian services to get Negative List Treatment after 5 Years
- Protective Features to guard against Unintended Consequences.
- End to Double Taxation
An Agreement Suiting the Specific Requirements of Indian Economy:
- Great care has been taken in negotiating the agreement to suit the peculiarities of the Indian economy. Here are some of its beneficial features:
- India has not provided access and kept out milk and other dairy products, wheat, sugar, iron ore, apple and walnuts from its offers to Australia. This is normally impossible as these are the major exports of Australia.
- Australia hopes for gains for its products such as Coal and Wines plus a few quotas in agriculture / horticulture products (almonds, cotton, lentil, pears, oranges, etc.) which are already being imported.
- Australia has offered Zero duty access to 100% of its lines & trade whereas India has so far offered only 70% of its lines for duty free/ reduced duty access to Australia.
- India can benefit hugely in the pharmaceutical sector. Through the Agreement, drugs approved in other developed jurisdictions will get quicker approval in Australia. This will enable easy penetration of the Australian medical market (India is just 3%).
- Major gains are expected for India’s labour-intensive sectors such as textiles/ apparel, leather/ footwear, gems and jewellery, fish products, machinery and electrical goods. They will gain duty free access on par with Vietnam and other countries, making them competitive.
- Liberal grant of work visas to students, employee/ worker visas, agriculture worker visas.
- This agreement hopes to encourage other developed countries such as UK, Canada, Europe to sign similar agreements with India.
- The Agreement allows India to overcome any loss it would have incurred as a result of walking out of RCEP, which was virtually an FTA with China.
Total India – Australia trade expected to cross US $ 45-50 billion by 2035:
- As a result of the aforementioned provisions, projections point to a number of long-term gains for the Indian economy.
- The coming into force of the India Australia ECTA is expected to consolidate and help in the growth of market share of Indian products and services. New markets for Indian goods in Australia are also likely to emerge. There is an expected growth in pharmaceutical products with the easing of Australian regulatory processes.
- There is expected to be a vertical movement in value chains with the increasing presence of higher value products of advanced technology. Exports are expected to increase by 10 billion by 2026-27 with a creation of approximately 10 lakh jobs.
- The total bilateral trade is expected to cross US $ 45-50 billion by 2035. It is expected that there will be enhanced job opportunities for Indians in Australia and increased remittance and investment flows to India from Australia.
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