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Q1. What is the status of the India-Australia trade? Analyse the provisions of the recently signed India and Australia Economic Cooperation and Trade Agreement (ECTA).
(250 words, 15 Marks)
Approach:
- Introduction: Give a brief background of India-Australia FTA negotiations.
- Body:
- Provide some details of the India-Australia trade.
- Highlight the provisions and benefits of the Economic Cooperation and Trade Agreement.
- Conclusion: Conclude suitably.
Answer:
The India-Australia FTA negotiations first began in 2011 but they were suspended in 2015 as the talks were stuck over issues such as market access for dairy products in India and visa liberalisation for Indian professionals.
- The negotiations were resumed in September 2021, and this time around things got done in a record time and the pact was signed in just over six months.
India-Australia Trade:
- According to government estimates, trade in goods is likely to almost double to $50 billion in five years from about $27 billion at present.
- Australia is the 17th largest trading partner of India, while New Delhi is Canberra’s 9th largest partner.
- Bilateral trade in goods and services stood at $27.5 billion in 2021.
- India’s goods exports were worth $6.9 billion, and imports aggregated to $15.1 billion in 2021.
Provisions of Economic Cooperation and Trade Agreement (ECTA):
- Zero-duty access: Under this agreement, India will give 85% of Australia’s exports zero-duty access to its domestic market.
○ India is expected to get zero-duty access to Australia for its goods over five years.
- Enhancing Volume of Trade: The ECTA is expected to increase trade between the two sides to $45-50 billion over five years, from the current estimate of $27 billion, and create over 10 lakh additional job opportunities.
- Access to the Indian Market for Australia’s items:
- Under this agreement, Australia will get the opportunity to export certain varieties of agricultural produce like potatoes, lentils, and meat products with some caveats. ○ India will also allow Australia to export raw materials under preferential terms like coal and mineral ores.
- Preferential Access to India’s Products: Australia will provide ‘preferential access’ to “all the labour intensive sectors” of export items from India such as gems and jewellery, textiles, leather, footwear, furniture, food, engineering products, medical devices, and automobiles.
- Most Favoured Nation Status: Australia has “offered wide-ranging commitments” in around 135 sub-sectors and Most Favoured Nation in 120 sub-sectors which cover key areas of the Indian services sector like IT, ITES, business services, health, education, and audio-visual services.
- Work Visas: Indian students in Australia will be able to secure work visas for periods ranging from 18 months to four years on a ‘reciprocal’ basis.
- “Rules of Origin”: There is a section on goods exports that lays out clearly “Rules of Origin” that are aimed at creating anti-dumping measures.
- Compulsory review mechanism: The Commerce Ministry underlined that this is the first trade deal signed by India that has a compulsory review mechanism after 15 years of implementation.
Shared values, shared interests, shared geography, and shared objectives are the bedrock of deepening India-Australia ties and the cooperation and coordination between the two countries have picked up momentum in recent years. Cooperation between India and Australia can go a long way in realising the vision of a free, open, inclusive, and rules-based Indo-Pacific region.
