India and Australia have signed the India-Australia Economic Cooperation and Trade Agreement in presence of the Prime Minister of India, Shri Narendra Modi and Prime Minister of Australia, Mr. Scott Morrison.
- India and Australia have been each other’s important trading partners.
- Australia is the 17th largest trading partner of India and India is Australia’s 9th largest trading partner.
- In 2021, India-Australia bilateral trade for both merchandise and services was valued at US$ 27.5 billion.
- India’s Exports – India’s merchandise exports to Australia grew 135% between 2019 and 2021. India’s exports consist primarily of a broad-based basket largely of finished products and were US$ 6.9 billion in 2021.
- India’s Imports – India’s merchandise imports from Australia were US$ 15.1 billion in 2021, consisting largely of raw materials, minerals and intermediate goods.
- The trade agreement is expected to double the bilateral trade to US$ 50 billion in five years and ease movement of people, goods and services across borders.
Features of the trade agreement –
- It covers areas like Trade in Goods, Trade in Services, Rules of Origin, Technical Barriers to Trade (TBT), Sanitary and Phytosanitary (SPS) measures, Dispute Settlement, Movement of Natural Persons, Customs Procedures, and Cooperation in other Areas.
- Compulsory Review Mechanism – There will be a special review mechanism for compulsory review after 15 years for certain aspects of the agreement in a time-bound manner.
- Zero Duty Access – Australia will provide zero-duty access to 96 per cent of India’s exports including shipments from key sectors such as engineering goods, gems and jewellery, textiles, apparel and leather. The agreement will also give about 85 per cent of Australia’s exports zero-duty access to the Indian market, including coal, sheep meat and wool, and lower duty access on Australian wines, almonds, lentils, and certain fruits.
- Cheaper Raw Materials – Australian exports are more concentrated in raw materials and intermediates. Many industries in India will get cheaper raw materials and make them competitive, in particular for sectors like steel, aluminium, garments among others.
- Service Sector Benefits – In the services sector, benefits for India include post study work visa of two-four years for Indian students on reciprocal basis.
- Easier movement of people – Work and holiday visa arrangement for young professionals will be eased.
- Eliminating Double Taxation – Australia has also agreed to amend its domestic tax law to stop the taxation of offshore income of Indian firms providing technical services in Australia.