Sending a strategic message 

 News: Recently, India and Australia, struck a trade deal known as the India-Australia Economic Cooperation and Trade Agreement (ECTA).

The deal was brokered after two decades of efforts. It is said to be a “watershed moment” for bilateral relations for both India and Australia. 

What has been proposed under the trade deal? 

It will enable elimination or phased reduction of tariffs on a range of Australian exports to India. The range of products includes coal, lentils, sheep meat, wool, lobsters, rare earths, wine and agricultural products. 

The deal will promote services exports. It will strengthen our people-to-people links. For example, the trade deal will provide a quota for chefs and yoga teachers, Indian students will be provided a post-study work visa of 2-4 year, and professional services will be mutually recognized. Others things that will be included are licensed/regulated occupations, and work and holiday visa arrangements for young professionals.  

It will help in taking advantage of the Indian diaspora which is called as the national economic asset of India. For example, one in five overseas students that live in Australia are from India. 

Why is the deal important? 

Seeks to double bilateral trade and investments between India and Australia in the next five years. 

Will eliminate tariffs on more than 85% of Australian goods exports to India (valued at more than $12.6 billion a year). 

Strategic importance –

– Both nations share norms and democratic principles and support a rules-based order in the Indo-Pacific region. Therefore, both nations are members of the Quad. 

– Further, both share economic and geopolitical risks in the Indo-Pacific region. In this context, a trade agreement shows the diversification of its strategic and economic approach for both the countries. 

What are some issues in Indo-Aus bilateral relations? 

Past

– In the past, Indo-Australia ties were derailed due to multiple reasons. For example, Australia responded against India’s nuclear tests conducted in 1998.

– The relations were also derailed due to over-the-top reaction by Indian media’s attacks on Indian students in Melbourne in 2009-2010. 

Present

– Recently, both India and Australia responded differently to the Russian invasion of Ukraine. India has been criticized for doing a ‘balancing act’ in wake of the Russian invasion of Ukraine.

– Both hail from opposite sides of power blocs during the Cold War.  

Source: The post is based on an article “Sending a strategic message” published in The Hindu on 7th Apr 22.