Australian Prime Minister Anthony Albanese recently said that the free trade agreement between India and Australia is a “transformative” deal that will unlock the next level of potential in bilateral trade and investment.
Addressing the India-Australia CEO forum in Mumbai, Albanese said the delegation of Australian investors that accompanied him was one of the most serious and high-profile to visit India from Australia.
He was optimistic about the complementarities between the two countries, saying the moment marks a turning point in accelerating economic cooperation.
“Australian fresh lobster and lamb used to be subject to a 30% tariff in India. Now, it’s zero. Tariffs on other products like avocado, citrus and seafood are on a pathway to zero,” Albanese said at another event.
The event was attended by CEOs of leading companies from India and Australia across sectors like metals and mining, telecom, food processing, education, pharmaceutical, healthcare, medical devices, banking, aviation, education, information technology, auto and institutional investors.
Economic Cooperation and Trade Agreement (ECTA)
The two countries entered into the Economic Cooperation and Trade Agreement (ECTA) in April 2022 and the deal came into effect in December 2022.
In fiscal year 2022, India was Australia’s ninth largest trading partner. Among the major exports to Australia are petroleum products, textiles and apparel, engineering goods, leather, pearls, mechanical appliances, iron and steel and gems and jewellery. Major imports include edibles, dyeing extracts, chemicals, wool, minerals and precious stones.
Under the ECTA agreement, India has reduced the duty on Australian wines from 150% to 100% for bottles priced at $5, down to 50% in 10 years. The duty on bottles priced at $15 or more has also been slashed from 150% to 75% and will be brought down to 25% in 10 years.
Also, over 85% of Australian goods exports by value to India are now tariff free, rising to 90% in six years, and high tariffs have been cut on some additional products. In addition, 96% of imports from India are now tariff free, rising to 100% in four years. Under the pact, Australia is offering zero-duty access to India for about 96.4% of exports (by value) from day one. This covers many products that currently attract 4-5% customs duty in Australia.
The #IndAusECTA covers major areas such as 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 and Movement of Natural Persons.
Benefits under Trade in Goods
Immediate duty-free access covers all labour-intensive sectors such as Textiles and Apparel, Agricultural and Fish products, Leather, Footwear, Furniture, many Engineering Products, Jewelry and select Pharmaceuticals. Consequently, many industries such as steel, aluminium, garments and others will get cheaper raw materials which will enable them to become competitive. Both sides have also agreed to a separate Annex on Pharmaceutical products under this agreement, which will enable fast-track approval for patented, generic and biosimilar medicines and 90% of Australian exports by value to get zero duty access to Indian market.
