What’s in the news?

• India and Australia have signed an Economic Co-operation and Trade Agreement (ECTA) in the presence of Prime Minister Narendra Modi and his counterpart in Canberra Scott Morrison, with an eye on doubling bilateral trade to $50 billion in five years and ease movement of people, goods and services across borders.
• The agreement with Australia is expected to create 10 lakh additional jobs in the country over the next five years.

About ECTA

• ECTA is an interim trade agreement that would be followed by a comprehensive deal by the end of the year. Trade talks between Delhi and Canberra had resumed in September last year after it began nearly a decade back in 2011.
• This is also the first such pact signed by India with a developed country in a decade. 
• Indian exports to Australia have been growing at a rapid clip and the agreement, which may be expanded further after its implementation in the current form, will facilitate zero duty access on over 96% of Indian exports, including several labour-intensive industries.
• India will, in turn, offer preferential access to Australia on over 70% of its tariff lines on goods imports, including ‘lines of export interest to Australia which are primarily raw materials and intermediaries such as coal, mineral ores and wines, etc.
• Tariffs will be eliminated on more than 85% of Australian goods exports to India (valued at more than $12.6 billion a year), rising to almost 91% (valued at $13.4 billion) over 10 years.
• The Commerce Ministry said the agreement provides adequate safeguards to prevent circumvention and protect against a sudden surge in import of goods. It also said this is the first trade deal which includes a compulsory review mechanism after 15 years.

Indo-Australian Relations 

• Australia is the 17th largest trading partner of India and India is Australia’s 9th largest trading partner. India-Australia bilateral trade for both merchandise and services is valued at $27.5 billion in 2021.
• India’s merchandise exports to Australia grew 135% between 2019 and 2021. India’s exports consist primarily of a broad-based basket largely of finished products and were US$ 6.9 billion in 2021.
• India’s merchandise imports from Australia were US$ 15.1 billion in 2021, consisting largely of raw materials, minerals and intermediate goods. India and Australia are partners in the trilateral Supply Chain Resilience Initiative (SCRI) arrangement along with Japan which seeks to enhance the resilience of supply chains in the Indo-Pacific Region. Further, India and Australia are also members of the recently formed Quad, also comprising the US, and Japan, to further enhance cooperation and develop partnerships across several issues of common concern.

Reference:

1. https://www.thehindu.com/news/national/india-australia-ink-economic-cooperation-and-trade-pact-to-boost-ties/article65283995.ece