India-Australia ECTA

On 29th December 2022, India-Australia ECTA Economic Cooperation and Trade Agreement (ECTA) came into force. It aims to set up a framework for strengthening and enhancing economic trade and investment relationships between two nations.

In May, Comprehensive Economic Partnership Agreement (CEPA) between India and UAW entered into action. Hence ECTA will be the second trade agreement for India that will come into action this year.

Expectations from India-Australia ECTA

• In the next five years, it has the potential to increase bilateral trade to $45-50 billion from the existing $31 billion.
• Generate 10 lakhs of additional employment opportunities in India.
• Further, create favorable conditions for the promotion of investment and startups.

Key Highlights of ECTA

• India will benefit from preferential market access with 100% tariff elimination provided by Australia. It includes various labor-intensive sectors like Gems and jewelry, leather, footwear, agriculture, and engineering products, etc.
• In the service sector, Australia has offered a wide range of commitments in key areas of India’s interest like IT, ITES, Audio-visual, health, education, and Business Services.
• Through a separate Annex on Pharmaceutical products, it will enable fast-track approval for patented, generic, and biosimilar medicines.
• Indian Graduates students from the STEM field will be provided extended post-study work visas.
• It will also cover areas like Sanitary and Phytosanitary Measures (SPS), Dispute settlement Mechanisms, rules of Origin, etc.

Significance of India-Australia ECTA

• It will enhance India’s merchandise export as previously it had a tariff disadvantage in labor-intensive sectors in the Australian market from China, Vietnam, Indonesia, Malaysia, etc.
• This agreement will help to change the developed world’s perspective towards India as a protectionist nature economy.
• Stronger economic relations between India and Australia will further strengthen Indo-Pacific Economic Architecture, promote mutual dependence across countries and sub-regions.

ECTA Agreement will further strengthen strategic relations, enhance bilateral trade in goods and services, create employment opportunities and improve the overall welfare of the people of both countries.