Australian Parliament Clears Way for India Trade Deal, Phase 2 Talks Soon

26-08-2023

12:20 PM

1 min read

Why In News?

The Australian Parliament ratified the Economic Cooperation and Trade Agreement (ECTA) with India, paving the way for implementing the deal.
After the ratification, both sides will decide a date to implement the pact and customs authorities will also issue a notification a day before the implementation.

India and Australia established diplomatic relations in the pre-Independence period, with the establishment of India Trade Office in Sydney in 1941.

In 2009, India and Australia established a ‘Strategic Partnership’, including a Joint Declaration on Security Cooperation.
This cooperation has been further elevated to Comprehensive Strategic Partnership (CSP) in 2020.
The Australian foreign policy blueprint released in November 2017 sees India in the front rank of Australia’s international partnerships.
In order to pursue the CSP, Foreign and Defence Ministers of both countries agreed to meet in a ‘2+2’ format biennially.

As part of its efforts to develop strong economic relationship with India, the Australian Government commissioned the India Economic Strategy to 2035 in July 2018.
This was done to define a pathway for Australia to unlock opportunities offered by Indian Economic growth.
Bilateral Trade:
- India had a trade deficit of $8.5 billion with Australia in FY22, with $8.3 billion worth of exports and $16.8 billion worth of imports.
- Total bilateral trade is expected to cross $45-50 billion in five years from $25 billion at present after the free trade deal comes into force.
- India was the 8th largest trade partner of Australia with trade in goods and services representing 3% share of the total Australian trade in FY 2019-20.

A Civil Nuclear Cooperation Agreement between the two countries was signed in September 2014 during the visit of then PM Tony Abbott to India.
The agreement provides the framework for substantial new trade in energy between Australia and India.

During PM Modi's visit to Australia in November 2014, both sides decided to extend defence cooperation to cover research, development and industry engagement.
Arrangement concerning Mutual Logistics Support (MLSA) and Implementing Arrangement concerning cooperation in Defence Science and Technology were concluded during the Virtual Summit held in June 2020.
India and Australia conduct their bilateral naval exercise 'AUSINDEX' since 2015.
- In 2018, Indian Air Force participated for the first time in the Exercise Pitch Black in Australia.
- In October-November 2020, the Australian Navy participated in Malabar Exercises.

A number of artifacts have been successfully repatriated to India in recent years. They include:
- Bronze Idol of Nataraja from Art Gallery of South Australia (AGSA) (2019),
- Nagaraja stone sculpture (2020),
- 2 Dwarpala stone sculptures (2020).

It continues to grow in size and importance, with the population of about seven hundred thousand.
India is one of the top sources of skilled immigrants to Australia.
The number of Indian students continue to grow with approximately 105,000 students presently studying in Australian universities.
- After England, India is the second largest migrant group in Australia in 2020.

India and Australia would now implement the free trade agreement on a mutually agreed date as the Australian Parliament approved the pact between the two countries.
- The India-Australia Economic Cooperation and Trade Agreement needed ratification by the Australian parliament before its implementation.
- In India, such pacts are approved by the Union Cabinet.

In April 2022, India and Australia signed an Economic Co-operation and Trade Agreement (ECTA).
The aim of this agreement is to double the bilateral trade to $50 billion in five years and ease movement of people, goods and services across borders.

Ambitious pact with significant commitments to tariff cuts
- Australia has agreed to eliminate Customs duty immediately on 98.3 per cent of the traded goods and on 100 per cent tariff lines over a period of five years.
- India, on the other hand, will do away with Customs duties on 40 per cent of products immediately and on 70.3 per cent of tariff lines over a period of 10 years.
With respect to labour intensive sector
- Major labour-intensive sectors in India that will benefit from the elimination of 5 per cent Customs duty at present include textiles and apparel, agricultural products, leather, furniture, jewellery, and pharmaceuticals.
With respect to agriculture and dairy sectors
- India has managed to completely shield its dairy sector from any tariff reduction under the FTA while excluding most sensitive agriculture items.
Provisions for services
- Both countries have decided to facilitate the recognition of professional qualifications, licensing, and registration procedures between professional services bodies.