Ind-Aus ECTA becomes effective from December 29, 2022

The Economic Cooperation and Trade Agreement (Ind-Aus ECTA) between India and Australia is now in force, which means it will have legal ramifications as of December 29, 2022.

India views Australia as a crucial strategic partner in the region. In addition to this, they are participants in the Indo-Pacific Economic Forum, the Trilateral Supply Chain Initiative, and the Four Nation QUAD (IPEF).

Ind-Aus ECTA becomes effective from December 29, 2022

The Minister of Commerce and Industry of India, Piyush Goyal, has stated that as a result of ECTA, Indian goods on all tariff lines will get access to the Australian market with zero customs duty, an additional 10 lakh jobs will be created in India, Indian yoga teachers and chefs will benefit from annual visa quotas, over 1 lakh Indian students will benefit from post-study work visas (for 18 months to 4 years), and other benefits will also be provided.

It is also anticipated that the India–Australia Economic Cooperation and Trade Agreement (ECTA) will expand opportunities for investments, boost exports, generate a sizeable increase in employment, and make it easier for the two nations to form strong bonds with one another.

This year, India has the unique distinction of implementing two Trade Agreements. The India-Australia Economic Cooperation and Trade Agreement (Ind-Aus ECTA) went into effect on December 29, 2022, following the entry into force of the India-UAE Comprehensive Economic Partnership Agreement on May 1, 2022. The Ind-Aus ECTA was signed on April 2, 2022, ratified on November 21, 2022, written notifications were exchanged on November 29, 2022, and the Ind-Aus ECTA entered into force on December 29, 2022, 30 days later.

On December 29, 2022, while speaking to representatives of various industries and members of the media in Mumbai, the Minister of the Union for Commerce and Industry, Piyush Goyal, stated that the Ind-Aus ECTA has been “negotiated with the speed of Bret Lee and the perfection of Sachin Tendulkar.”

How will the Ind-Aus ECTA benefit both the countries?

According to Union Commerce and Industry Minister Shri Piyush Goyal, there is a lot of potential for India to export finished goods to Australia, because Australia hardly manufactures anything and is primarily a raw material and intermediate producing country. India will receive cheaper raw materials from Australia, which will not only make India more competitive globally, but will also allow us to better serve Indian consumers by providing more quality goods at lower prices.

Australia, which is heavily reliant on imports, will benefit greatly; they will soon see a large increase in finished goods coming in from India, providing a large amount of work and job opportunities in both goods and services provided by Indian talent.

The Indo-Australia ECTA will also eliminate double taxation on IT services, which was making us less competitive and profitable in the IT sector. The double taxation has now been removed by amending the law, and from April 1st, double taxation for the IT sector will be over, saving us millions and millions of dollars right now, and over a billion dollars in the future, possibly 5 – 7 years, giving us a competitive edge and creating a lot of jobs.

I appreciate the Australian government’s sensitivity and consideration in providing us with full cooperation throughout the negotiations, particularly in protecting the interests of India’s farmers and dairy sector. Agriculture and the dairy sector, which were very sensitive for India and without which Australia had never done an agreement before, have been protected, and I am extremely grateful to the Australian government for this.

Indian goods across all tariff lines will have zero customs duty access to the Australian market.

The Indo-Australia ECTA provides an institutional mechanism to encourage and improve bilateral trade. It covers almost all of India’s and Australia’s tariff lines.

Australia will provide India with preferential market access on 100% of its tariff lines, including all labor-intensive export sectors of interest to India, such as gems and jewellery, textiles, leather, footwear, furniture, food and agricultural products, engineering products, medical devices, and automobiles. On the other hand, India will provide preferential access to Australia on more than 70% of its tariff lines, including lines of export interest to Australia, such as coal, mineral ores, and wines.

In terms of trade in services, Australia has made broad commitments in approximately 135 sub-sectors, as well as Most Favoured Nation (MFN) status in 120 sub-sectors covering key areas of interest to India.

On the other hand, India has offered Australia market access in approximately 103 sub-sectors and Most Favored Nation status in 31 sub-sectors from the 11 broad service sectors, such as ‘business services,’ ‘communication services,’ and so on.

Under this agreement, both parties have agreed to a separate Annex on Pharmaceutical Products, which will allow for fast-track approval of patented, generic, and biosimilar medicines.

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