India on Saturday inked a historic trade deal with its business partner Australia to export over 95 per cent of its goods to the island country free of duty. The Australia-India Economic Cooperation and Trade Agreement, called by India as IndAus ECTA signifying unity, was signed in a virtual ceremony on the day by Indian commerce minister Piyush Goyal and Australian trade minister Dan Tehan, in presence of Prime Ministers Narendra Modi and Scott Morrison. This is the first trade agreement India has made with a developed economy after more than a decade.
According to the scope of the deal, the bilateral trade in goods and services for both the countries is expected to rise from the existing $27.5 billion to $45 billion in five years. With the world adopting a source diversification strategy, the IndAus ECTA provides good scope as a sourcing alternative for Australia to procure Indian products. It will also provide new market entry of Indian products and services not currently being exported to the Australia.
Terming ‘people to people’ relations as the key pillar of the relationship between India and Australia, Prime Minister Narendra Modi said, “This agreement will facilitate the exchange of students, professionals, and tourists between us, which will further strengthen these relations.”
Australia is offering zero duty access to India for about 96.4 per cent of exports (by value) from day one. This covers many products which currently attract 4-5 per cent customs duty in Australia.
Items That Will Enjoy Duty Free Export to Australia
Indian exports to Australia primarily consist of consumer and manufactured goods. Major gains for goods will be in terms of tariff liberalisation by the Australian side, aided by gains from fast track approval for Pharma products in Australia.
Under the IndAus ECTA, Australia is offering zero duty access to 100% tariff lines from India. Under the zero duty agreement, As much as 96.4% value of Indian exports will get zero duty access immediately, which comprises 98 per cent of Tariff Lines) . This means that for these tariff lines, Indian exports will have immediate market access at zero duty from day one of the pact coming into force Exports in following labour-intensive sectors, currently subjected to import duty of 4-5 per cent by Australia, will gain from immediate duty-free access.
The following items will come under the zero duty agreement
-Most textiles and apparel including bed and bath linen, toilet and kitchen linen, curtains, pillow covers, quilts and comforters, cotton bags, readymade garments, and carpets and floorings
-A few Agricultural and Fish products,
-Leather items, footwear, furniture and Sport goods
-Jewellery and gemstones
-Machinery, Electrical Goods, Railway wagons. Engineering items like flat and value-added iron and steel products, parts, transport equipment, non-electrical and electrical machinery
-Selected Pharmaceutical products, and scientific and medical instruments. This will benefit all Indian units and medicines which have EU/ Canada FDA approvals.
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