India-Australia trade relations

India-Australia trade relations

Subject :Economy

Context:

The Australian Parliament approved the free trade agreement inked with India in April.

Details:

• The pact is expected to come into force from January 2023.
• The agreement is likely to push the bilateral trade to USD 45-50 billion in the next five-six years from the present USD 31 billion.

Concept:

The India-Australia Economic Cooperation and Trade Agreement (ECTA)

• It would provide duty-free access to Indian exporters of over 6,000 broad sectors including textiles, leather, furniture, jewellery and machinery in the Australian market.
• Australia is offering zero-duty access to India for about 96.4 per cent of exports (by value) from day one.
  • This covers many products that currently attract 4-5 per cent customs duty in Australia.
• Australia will open 100 per cent of their lines (products) with no restriction on even quota.
• This is the first time Australia has done this for any country.
• Labour-intensive sectors which would gain immensely include textiles and apparel, few agricultural and fish products, leather, footwear, furniture, sports goods, jewellery, machinery, electrical goods and railway wagons.

India-Australia trade relations:

• Australia and India upgraded bilateral relationship from ‘Strategic Partnership’ in 2009 to Comprehensive Strategic Partnership (CSP) in 2020.
• India was Australia’s seventh-largest trading partner and sixth-largest export market in 2020, driven by coal and international education. Currently, India is the 9th largest trading partner of Australia (2021). 
• During 2021, Bilateral trade in goods and services with India was US$ 27.5 billion, with exports of goods and services worth US$ 10.5 billion and imports of goods and services worth US$ 17 billion.
• Balance of trade is in favour of Australia by US$ 6.5 billion.
•  India’s merchandise exports to Australia grew 135% between 2019 and 2021.
  • India’s main exports to Australia are refined petroleum, medicaments (incl. veterinary), pearls & gems, jewellery, made-up textile articles, women’s clothing (excl knitted), other textile clothing, manufactures of base metal, while India’s major imports are coal, confidential items of trade, copper ores & concentrates, natural gas, non-ferrous waste & scrap, ferrous waste & scrap and education related services.
  • Education is Australia’s largest service export to India, valued at $6 billion and accounting for around 88 per cent of the total in 2020.
• The elevation of the Australia-India relationship to a Comprehensive Strategic Partnership (CSP) includes a commitment to encourage expanded trade and investment flows to the benefit of both economies.

To support more Australian and Indian business partnerships, the Australian Government has launched the Australia India Business Exchange (AIBX) program.