India, Australia Economic Cooperation and Trade Agreement comes into force from 29 December. India and Australia signed the Economic Cooperation and Trade Agreement (ECTA) on the 2nd of April 2022. ECTA is the first trade agreement of India with a developed country after more than a decade. The agreement encompasses cooperation across the entire gamut of bilateral economic and commercial relations between the two friendly countries.
Significance of This Trade Agreement:
- Under this trade agreement, Indian exports will benefit from preferential zero-duty market access in Australia for 100 per cent of its tariff lines. It will benefit India’s labour-intensive sectors such as gems and jewellery, textiles, leather, furniture, food and agricultural products, engineering products, and medical devices.
- India has provided preferential access to Australia on over 70 per cent of its tariff lines, which are primarily raw materials and intermediaries. As a result of this agreement, 10 lakh jobs are estimated to be created in the country. The total bilateral trade is expected to cross 45 to 50 billion dollar in five years from the existing 31 billion US dollar.
- ECTA will save Australian exporters around $2 billion a year in tariffs, while consumers and business will save around $500 million in tariffs on imports of finished goods, and inputs to our manufacturing sector.
- India had a trade deficit of $8.5 billion with Australia in FY22, with $8.3 billion worth of exports and $16.8 billion worth of imports. Bilateral trade is expected to cross $45-50 billion in five years from $25 billion at present after the trade deal comes into force.