India and Australia signed an interim free trade agreement to double bilateral trade to $50 billion in five years while also easing people’s movement and tariffs on various Australian goods.
The Economic Co-operation and Trade Agreement (ECTA) was signed by Indian Prime Minister Narendra Modi and his counterpart in Canberra, Scott Morrison. It will grant duty-free access to over 6,000 Indian industries, including textiles, leather, furniture, jewellery, and machinery.
The partnership between India-Australia has grown from strength to strength. Today marks a landmark moment for 🇦🇺🇮🇳 relations as The Australia-India Economic Cooperation and Trade Agreement was signed by @DanTehanWannon and @PiyushGoyal #IndAusECTA #AIBX https://t.co/tG45oONZDC
Australia’s administration is attempting to diversify export markets and reduce Australia’s reliance on its largest trading partner, China. Both have been involved in several diplomatic disputes that have resulted in Beijing sanctioning certain Australian products.
The agreement with India eliminates tariffs on more than 85 per cent of Australian goods exports to India, valued at $12.6 billion, rising to nearly 91 per cent, valued at $13.4 billion, over ten years. According to Prime Minister Scott Morrison, the agreement will provide enormous trade diversification opportunities for Australian producers and service providers exporting to India.
“This agreement opens a big door into the world’s fastest-growing major economy for Australian farmers, manufacturers, producers, and many more,” the Prime Minister said.
“By unlocking the vast market of around 1.4 billion consumers in India, we are strengthening the economy and growing jobs right here at home.
“This is great news for lobster fishers in Tasmania, wine producers in South Australia, macadamia farmers in Queensland, critical minerals miners in Western Australia, lamb farmers from New South Wales, wool producers from Victoria and metallic ore producers from the Northern Territory.”
Higher education and adult education; business services (tax, medical and dental, architectural and urban planning; research and development; communication, construction, and engineering; insurance and banking; hospital; audio-visual; and tourism and travel are among the 31 sectors and sub-sectors guaranteed to receive the best treatment accorded by India to any future free trade agreement partner.
Strengthening India-Australia economic and trade relations.
For meat producers
Sheep meat tariffs of 30 per cent will be eliminated on entry into force, providing a boost for Australian exports that already command nearly 20 per cent of India’s market.
Wool will have the current 2.5 per cent tariffs eliminated on entry into force, supporting Australia’s second-largest market for wool products.
For wine producers
Tariffs on wine with a minimum import price of US$5 per bottle will be reduced from 150 per cent to 100 per cent on entry into force and subsequently to 50 per cent over ten years (based on the Indian wholesale price index for wine).
Tariffs on wine bottles with a minimum import price of US$15 will be reduced from 150 per cent to 75 per cent on entry into force and subsequently to 25 per cent over ten years (based on the Indian wholesale price index for wine).
Tariffs up to 30 per cent on avocados, onions, broad, kidney and adzuki beans, cherries, shelled pistachios, macadamias, cashews in-shell, blueberries, raspberries, blackberries, currants will be eliminated over seven years.
Tariffs on almonds, lentils, oranges, mandarins, pears, apricots and strawberries will be reduced, improving opportunities for Australia’s horticulture industry to supply India’s growing food demand.
For mining industry
The resources sector will benefit from eliminating tariffs on entry into force for coal, alumina, metallic ores, including manganese, copper and nickel, and critical minerals, including titanium and zirconium. LNG tariffs will be bound at 0 per cent at entry into force.
Coal accounts for about 74 per cent of imports from Australia, and currently, it attracts a 2.5 per cent duty. About 73 per cent of the coking coal, used mainly through steel players, is imported from Australia. India also imports thermal coal from that nation.
For Pharma sector
According to the United Nations COMTRADE database on international trade, India’s pharmaceutical product exports to Australia totalled US$343.09 million in 2021.
Over five and seven years, tariffs on pharmaceutical products and certain medical devices will be eliminated.
Furthermore, Australia will open up new opportunities for young Indians to participate in working holidays in Australia. The number of places in Australia’s Work and Holiday programme will be limited to 1,000 per year, and the country will have two years to implement the outcome.
This is expected to help with workforce needs and tourism, which will aid in our post-COVID recovery.
To strengthen our STEM and IT workforces, the length of stay for an Indian student with a bachelor’s degree with first-class honours will be increased from two to three years after completing studies in Science, Technology, Engineering, or Mathematics (STEM) and information and communications technology (ICT) sectors.
“Post-study work visas will provide extended options for working in Australia to eligible Indian graduates, postgraduates and STEM (science, technology, engineering and mathematics) specialists,” India’s commerce minister Piyush Goyal said, adding that currently, there is more than 1 lakh [100,000] Indian students enrolled in various courses in Australia.
Australia has agreed to resolve the issue of double taxation that domestic IT companies face in that market. Canberra has also agreed to change its domestic tax laws to prohibit the taxation of offshore income earned by Indian firms that provide technical services in Australia.
India and Australia have a solid and purposeful bilateral relationship. The scope of Australia’s relationship with India has grown in tandem with India’s rapid economic and strategic growth, supported by trade and investment.
According to government data, India was Australia’s seventh-largest trading partner in 2020, with two-way trade valued at $24.3 billion and the sixth-largest goods and services export market, valued at $16.9 billion.
Australian exports to India are increasing; India is now Australia’s fourth-largest export market, highlighting India’s importance as a major export and investment destination for Australia. Merchandise exports to India grew 36.8 per cent from $7.3 billion in 2005-06 to $10.1 billion in 2006-07.
Interestingly, Education is Australia’s largest service export to India, valued at $6 billion and accounting for around 88 per cent of the total in 2020. At the end of 2020, Indian students in Australia numbered 115,137.
This post was aggregated from Dynamic Business (https://dynamicbusiness.com).