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India-Australia Trade Agreement

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  • Published
    26th Nov, 2022


The Australian Parliament has ratified the Economic Cooperation and Trade Agreement (ECTA) with India. This pact has been seen as an opportunity for growing Indian Businesses.


  • In September 2021, Australia and India formally re-launched CECA negotiations with the intention of concluding an Economic Cooperation and Trade Agreement (AI-ECTA).
  • It aimsto swiftly liberalise and deepen bilateral trade in goods and services, and to then use this foundation to resume negotiations on the more ambitious CECA.


The India-Australia ECTA:

  • It covers almost all the tariff lines dealt in by India and Australia.

Tariff Lines: It is a product as defined in lists of tariff rates. A specific tariff is a tax imposed directly onto one imported good and does not depend on the value of that imported good. A specific tariff is usually based on the weight or number of imported goods.

  • India will benefit from preferential market access provided by Australia on 100% of its tariff lines.
  • India will be offering preferential access to Australia on over 70% of its tariff lines.
  • Under the agreement, Indian graduates from STEM (Science, Technology, Engineering and Mathematics) will be granted extended post-study work visas.
  • It will provide zero-duty access to 96% of India’s exports to Australia and will give about 85% of Australia’s exports zero-duty access to the Indian market
  • It will boost bilateral trade in goods and services to USD 45-50 billion over five years, up from around USD 27 billion, and generate over one million jobs in India, according to a government estimate.


  • Enhanced Exports: Currently, Indian exports face a tariff disadvantage of 4-5% in many labour-intensive sectors vis-à-vis competitors in the Australian market such as China, Thailand, Vietnam, South Korea, Japan, Indonesia and Malaysia.
    • Removing these barriers under the ECTA can enhance India’s merchandise exports significantly.
  • Cheaper Raw Materials: Australian exports to India are more concentrated in raw materials and intermediate products.
    • Due to zero-duty access to 85% of Australian products, many industries in India will get cheaper raw materials and thus become more competitive, particularly in sectors like steel, aluminium, power, engineering and so on.
  • Change in Perceptions for India: It will help to change perceptions of developed countries towards India as ‘protectionist’ and address scepticism around India’s openness to do business with the world.

Impacts on India:

  • Global supply chains get strengthened: India’s rationale for signing a comprehensive economic agreement with these countries is to be part of the global value chains (GVCs), both, trade and foreign investment is central to GVCs.
  • Stronger Indo-Pacific: Strong Australia India economic ties will also pave the way for a stronger Indo-Pacific economic architecture.

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