The Economic Cooperation and Trade Agreement (ECTA) is expected to increase bilateral trade between India and Australia in the next five years.
This is the first free trade agreement between India and a developed country in a decade. It was signed in April 2022 and came into force from December 29, 2022.
Among Indian states Tamil Nadu and Uttar Pradesh have already taken the lead in terms of their engagements to take advantage of this free trade agreement. The free trade agreement has set the framework and a conducive environment for businesses to operate in.
Australia is the seventeenth largest trading partner to India and India is Australia’s ninth largest trading partner.India’s exports to Australia grew 135 per cent between 2019 and 2021 and primarily comprise finished products such as textiles and apparels, engineering products, leather, footwear, gems and jewellery, and sportswear.
India’s imports from Australia consist largely of raw materials, minerals, and intermediate goods. Following the implementation of the ECTA, a significant growth is expected in finished products from India’s labour-intensive sectors such as textiles and apparel, gems and jewellery, leather and footwear, furniture, and engineering goods. These items had a four per cent to five per cent tariff in Australia pre-ECTA.