Economic Cooperation and Trade Agreement signed by India-Australia

Posted By
10Pointer
Categories
World Affairs
Published
5th Apr, 2022

India and Australia signed an Economic Cooperation and Trade Agreement, hailing it as a watershed moment and one of the biggest economic doors there is to open in the world.

Under this agreement, Australia will be providing duty-free access for over 95 percent of Indian goods like leather, textiles, sports products, and jewellery in its market.

Context

India and Australia signed an Economic Cooperation and Trade Agreement, hailing it as a watershed moment and one of the biggest economic doors there is to open in the world.

Under this agreement, Australia will be providing duty-free access for over 95 percent of Indian goods like leather, textiles, sports products, and jewellery in its market.

Key-Points

It is India’s first Free Trade Agreement (FTA) with a large developed country in more than a decade.

India inked an FTA with the UAE in February and is actively negotiating FTAs with Israel, Canada, the United Kingdom, and the European Union.

Indian STEM (Science, Technology, Engineering, and Mathematics) graduates will be awarded extended post-study work visas under the deal.
- Australia will also establish a programme to provide visas to young Indians who wish to spend their vacations working in the country.
Zero-duty access: The deal would provide duty-free access in its market for over 6,000 broad sectors of India, including textiles, leather, furniture, jewellery and machinery.

Around 85% of Australia’s exports, including coal, sheep meat, and wool, will have zero duty access to the Indian market, while Australian wines, almonds, lentils, and select fruits would have lower duty access.
Under the deal, zero-duty access for Indian goods will be expanded to 100% over the next five years.

The need game

Why Australia needs India

Why India needs Australia

Australia needs a new friend to buy their export products as its old export friend China, has taken offence to Australia's past actions.
Australian Prime Minister Scott Morrison will soon be heading towards a national election campaign in Australia.
1 in 5 jobs in Australia depends on exports while in regional Australia, the figure is 1 out of 4 jobs.

India needs strong friends (developed nations) who can support its export momentum and help it pile its foreign reserves.
India also needs to maintain a great export momentum for the coming years.
This can support more jobs in the international market and is a great opportunity for so many professionals.

Impact of the Agreement

Increase in bilateral trade: The agreement is likely to enable an increase bilateral trade in products and services to $45-50 billion over the next five years, up from roughly $27 billion.
In FY2021, bilateral goods and services trade between India and Australia was $27.5 billion.

In FY2022, merchandise exports to Australia grew at a quicker rate than exports to any other country.

Exports of Indian goods and services to Australia are predicted to hit $20 billion in FY2027 and $35 billion in FY2035, up from around $10.5 billion in FY2021.