India-Australia Economic Cooperation and Trade Agreement
ECTA to enhance people to people contact leading to generation of additional businesses, significant increase in exports, investment and employment for more than one million.
Union Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles, Shri Piyush Goyal, said that Australia would eliminate duties on 100 per cent tariff lines under the landmark India-Australia Economic Cooperation and Trade Agreement (Ind-Aus ECTA). He was addressing a press conference on the ECTA following the approval of the Agreement by the Australian Parliament today.
Minister expressed his gratitude to Prime Minister Shri Narendra Modi and said that the ECTA was made possible because of the bond that he had built with the leadership in Australia, cutting across party lines.
Shri Goyal said that the ECTA would boost several sectors of the economy, especially textiles, gems, jewellery, and pharmaceuticals. Notably, 10 lakh jobs are estimated to be created due to the ECTA. He noted that the Agreement would also open new opportunities for the service sector in India and would immensely benefit students by offering them an opportunity to work in Australia. An annual Visa quota of 1800 is to be instituted for India Yoga teachers and Chefs.
The Minister underscored that the Agreement was finalized after extensive and exhaustive stakeholder consultations and pointed out that it was unanimously accepted and supported by all quarters.
Shri Goyal observed that the Agreement reflected the confidence and trust between the two countries and India’s growing stature in the world. He said that ECTA would further deepen India’s relationship with Australia, a vibrant democracy which shared several of India’s interests.
IndAus ECTA, signed on 2 April 2022, is now ready for ratification for its early implementation, with the Ind-Aus ECTA Bill and the DTAA amendment bill being passed by the Australian Parliament today and is being placed before Executive Council to get Royal Assent. The Agreement will enter into force shortly, on a mutually convenient date, once both sides have completed their domestic processes.
Australia is an important strategic partner of India, and both democracies are part of the four-nation QUAD, Trilateral Supply Chain Initiative and the Indo-Pacific Economic Forum (IPEF). The trade relationship facilitated through ECTA will open a new chapter on India-Australia Comprehensive Economic Partnership between two vibrant economies with shared interests and trade complementarities. This agreement, initiated by the Hon’ble Prime Ministers of both sides, is the cornerstone of our multi-faceted bilateral relations. 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. This will also connect with more than seven lakhs of Australia’s Indian diaspora, the second-highest taxpaying diaspora, which significantly contributes to Australia’s society and economy.
ECTA provides an institutional mechanism to encourage and improve trade between the two countries. For the first time, decisions completely based on extensive stakeholder consultations with every industry, Ministry, trade association etc., unlike the previous FTAs was undertaken. With this agreement, the total bilateral trade will be expected to cross US$ 45-50 bn in 5 years from the existing US$ 31 bn. India’s Merchandise Exports will likely increase by 10 billion by 2026-27. Moreover, since the labour-intensive sectors will benefit, it is expected to create additional employment of at least 10 lakhs jobs in India, create ample investment opportunities, and promote start-ups. Similarly, it would provide enhanced job opportunities for Indians in Australia and increase remittance flows to India.
Around 96% of Australia’s exports are raw materials and intermediate products, allowing many Indian industries to get cheaper raw materials and make them competitive. Investments will help increase the presence of higher-value products of advanced technology, thereby promoting vertical Movement in the value chain (Engineering, Electronics, Pharmaceuticals & Medical devices). Another major gain is in the Pharmaceuticals sector, where Drugs approved in other developed jurisdictions will get fast-track approval for patented, generic and biosimilar medicines.
As regards trade in services, Australia has offered wide-ranging commitments in around 135 sub-sectors. which cover key areas of India’s interest like IT, ITES, Business services, Health, Education, and Audiovisual. Some of the key offers from Australia in the services space include Quota for chefs and yoga teachers; Post study work visa of 2-4 years for Indian students on a reciprocal basis; mutual recognition of Professional Services and Other licensed/regulated Occupations; and Work & Holiday visa arrangement for young professionals. Moreover, the long pending issue under Double taxation related to IT/ITES has been resolved under this Agreement. It will provide financial savings of more than US$ 200 million per year per the estimates received from the Industry Associations.
As part of the commitments under ECTA, for the Comprehensive Ind-Aus ECTA, Chief Negotiators from both sides will have a meeting shortly to finalise the Scoping document.
In a nutshell, the India-Australia ECTA will further cement the already deep, close and strategic relations between the two countries, significantly enhancing bilateral trade in goods and services, creating new employment opportunities, raising living standards, and improving the general welfare of the people of the two countries.