Will strengthen strategic partnership: PM Modi welcomes India-Australia free trade agreement

New Delhi, Nov 22: Prime Minister Narendra Modi on Tuesday welcomed free trade agreement between India and Australia in a move doubling the two-way commerce to USD 45-50 billion in about five years. The pact is expected to come into force from January 2023.

"Thank you PM Anthony Albanese! The entry into force of IndAus ECTA will be greatly welcomed by our business communities, and will further strengthen the India-Australia Comprehensive Strategic Partnership," tweeted PM Modi.

Under the new trade agreement, duties on 100 percent tariff lines would be eliminated by Australia under the landmark India-Australia Economic Cooperation and Trade Agreement (Ind-Aus ECTA).

Union Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles, Piyush Goyal expressed his gratitude to Prime Minister Narendra Modi and said that the ECTA was made possible because of the bond that he had built with the leadership in Australia cutting across party lines.

Goyal said that the ECTA would give a big boost to several sectors of the economy, especially textiles, gems and jewellery and pharmaceuticals. It may be noted that 10 lakh jobs are estimated to be created as the result of the ECTA. He noted that the Agreement would also open new opportunities for the service sector in India and would immensely benefit students by offering them an opportunity to work in Australia. Annual Visa quota of 1800 is to be instituted for India Yoga teachers and Chefs.

The Minister underscored that the Agreement was finalized after extensive and exhaustive stakeholder consultations and pointed out that it was unanimously accepted and supported by all quarters.

Goyal observed that the Agreement reflected the confidence and trust between the two countries, and India's growing stature in the world. He said that ECTA would further deepen India's relationship with Australia, a vibrant democracy which shared several of India's interests.

IndAus ECTA which was signed on 2 April 2022, is now ready for ratification for its early implementation, with the Ind-Aus ECTA Bill and the DTAA amendment bill being passed by the Australian Parliament today and is being placed before Executive Council to get Royal Assent.

The Agreement will enter into force shortly, on a mutually convenient date once both the sides have completed their domestic processes.

Australia is an important strategic partner of India and both the democracies are part of the four nation QUAD, Trilateral Supply Chain Initiative and the Indo-Pacific Economic Forum (IPEF).

The trade relationship facilitated through ECTA will open a new chapter on India-Australia Comprehensive Economic Partnership between two vibrant economies with shared interest and trade complementarities.

This agreement initiated by the Prime Ministers of both the sides, is the cornerstone of our multi-faceted bilateral relations. ECTA is the first trade agreement of India with a developed country after more than a decade.

The Agreement encompasses cooperation across the entire gamut of bilateral economic and commercial relations between the two friendly countries. This will also connect with more than seven lakhs of Australia's Indian diaspora, second highest taxpaying diaspora, which makes a significant contribution to Australia's society and economy.

ECTA provides for an institutional mechanism to encourage and improve trade between the two countries. For the first time, decisions completely based on extensive stakeholder consultations with every industry, Ministries, trade associations etc unlike the previous FTAs was undertaken.

It is expected that with this agreement, the total bilateral trade will cross US$ 45-50 bn in 5 years from existing US$ 31 bn. India's Merchandise Exports is likely to increase by 10 billion by 2026-27.

Moreover, since the labour-intensive sectors will be benefitted, it is expected to create an additional employment of atleast 10 lakhs jobs in India, create ample opportunities for investment, promotion of start-ups. Similarly, it would provide enhanced job opportunities for Indians in Australia and increased remittance flows to India.

Around 96% of Australia's exports are raw materials and intermediate products which will allow many Indian industries to get cheaper raw materials and make them competitive. Investments will help increasing presence of higher value products of advanced technology, thereby promoting vertical Movement in the value chain (Engineering, Electronics, Pharmaceuticals & Medical devices).

Another major gain is in Pharmaceuticals sector, where Drugs approved in other developed jurisdiction will get fast track approval for patented, generic and biosimilar medicines.

As regards trade in services, Australia has offered wide ranging commitments in around 135 sub sectors. which cover key areas of India's interest like IT, ITES, Business services, Health, Education, and Audio visual.

Some of the key offers from Australia in the services space include: Quota for chefs and yoga teachers; Post study work visa of 2-4 years for Indian students on reciprocal basis; mutual recognition of Professional Services and Other licensed/regulated Occupations; and Work & Holiday visa arrangement for young professionals.

Moreover, the long pending issue under Double taxation related to IT/ITES has been resolved under this Agreement which will provide a financial savings of more than US$ 200 million per year as per the estimates received from the Industry Associations.

As part of the commitments under ECTA, for the Comprehensive Ind-Aus ECTA, Chief Negotiators from both the sides will have a meeting shortly to finalise the Scoping document.

In a nutshell, the India-Australia ECTA will further cement the already deep, close and strategic relations between the two countries and will significantly enhance bilateral trade in goods and services, create new employment opportunities, raise living standards, and improve the general welfare of the peoples of the two countries.