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Source: The post is based on the article “Economic Cooperation and Trade Agreement with Australia will significantly open up opportunities for Indian businesses: Piyush Goyal” published in The Hindu on 22nd November 2022.
What is the News?
The Australian Parliament has ratified the Economic Cooperation and Trade Agreement (ECTA) with India paving the way for implementing the deal as early as January 1, 2023.
What is the Economic Cooperation and Trade Agreement(ECTA) signed between India and Australia?
The India-Australia ECTA is the first trade agreement of India with a developed country in more than a decade after the Comprehensive Economic Partnership Agreement was signed with Japan in 2011.
The Agreement encompasses cooperation across the entire gamut of bilateral economic and commercial relations between the two friendly countries and covers areas like Trade in Goods, Rules of Origin, Trade in Services among others.
Key Provisions of the agreement
Custom Duty: Under the deal, Australia has agreed to eliminate Customs duty immediately on 98.3 percent of the traded goods and on 100 percent tariff lines over a period of five years.
– On the other hand, India will do away with Customs duties on 40 percent of products immediately and on 70.3 percent of tariff lines over a period of 10 years.
– 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.
Visas: India can every year send 1,800 Yoga teachers and Indian chefs to Australia and 1,000 work-cum-holiday visas will be available for young professionals. Post-study work visas for up to four years will benefit over 100,000 Indian students.
Wine: On Australian wine, India has agreed to reduce tariff over a period of 10 years, However, on wine bottles priced below $5, the existing Customs duty of 150% will not be reduced.
Agriculture and dairy sectors: India has managed to completely shield its dairy sector from any tariff reduction under the FTA while excluding the most sensitive agriculture items.
Recognition of professional qualifications: Both countries have decided to facilitate the recognition of professional qualifications, licensing, and registration procedures between professional services bodies.
What is the significance of this agreement?
Firstly, the total bilateral trade will cross US$ 45-50 bn in 5 years from the existing US$ 31 bn. India’s Merchandise Exports are likely to increase by 10 billion by 2026-27.
Secondly, since the labour-intensive sectors will be benefitted, it is expected to create additional employment of at least 10 lakhs jobs in India, create ample opportunities for investment, and promotion of start-ups.
Thirdly, it would provide enhanced job opportunities for Indians in Australia and increase remittance flows to India.