Signing of the Economic Cooperation and Trade Agreement (ECTA) between India and Australia

What is the News?

India and Australia have signed the India-Australia Economic Cooperation and Trade Agreement(ETCA).

About the Bilateral Trade Between India and Australia

Australia is the 17th largest trading partner of India, and India is Australia’s 9th largest trading partner. 

India and Australia are partners in the trilateral Supply Chain Resilience Initiative (SCRI) arrangement along with Japan, which seeks to enhance the resilience of supply chains in the Indo-Pacific Region. 

Further, India and Australia are also members of the Quad also comprising the US, and Japan, to further enhance cooperation and develop partnerships across several issues of common concern.

What are the key provisions of the India-Australia ECTA?

Zero Duty Access on Goods: It provides zero-duty access to 96% of India’s exports to Australia. This includes shipments from key sectors such as engineering goods, gems and jewellery, textiles, apparel and leather.

It also gives about 85% of Australia’s exports zero-duty access to the Indian market, including coal, sheep meat and wool, and lower duty access on Australian wines, almonds, lentils, and certain fruits.

Indian Students: Under the agreement, Indian graduates from STEM (Science, Technology, Engineering and Mathematics) will be granted extended post-study work visas. Australia will also set up a programme to grant visas to young Indians looking to pursue working holidays in Australia.

Strict Rules of Origin: The agreement also includes strict rules of origin to prevent any routing of products from other countries and provides for a safeguard mechanism to address any sudden surges in imports of a product.

Faster approval of Indian Medicines: The agreement will allow for faster approval of Indian medicines by Australian regulators, as they have agreed to use inspection reports and approvals from Canada and the EU in the evaluation process for Indian pharmaceuticals and manufacturing facilities.

Addressed issue of Double Taxation: Australia has addressed a long-standing concern of Indian IT firms on double taxation by agreeing to amend local taxation laws to stop the taxation of offshore income of Indian firms providing technical services to Australia.

What is the significance of this agreement?

It is the first Free Trade Agreement(FTA) that India has signed with a major developed country in over a decade. 

In February 2022 India signed an FTA with the UAE and is currently working on FTAs with Israel, Canada, the UK and the EU.

Source:  This post is based on the following articles: 

– “Signing of the Economic Cooperation and Trade Agreement (ECTA) between India and Australia” published in PIB on 2nd April 2022.

–PM witnesses signing of The India-Australia Economic Cooperation and Trade Agreement-“IndAus ECTA” published in PIB on 2nd April 2022.