Corporate Governance

Indo-Australian Free Trade Agreement to come into force from 29 December

Indo-Australian Free Trade Agreement

Indo-Australian Free Trade Agreement

Indo-Australian Free Trade Agreement – India and Australia have had excellent historical relations on a bilateral basis, which have grown into a friendly partnership. Common values of pluralistic civilizations, parliamentary democracies, and commonwealth customs further encourage this cooperation.

A free trade agreement between the two countries was signed, and it will go into effect on December 29, 2022. Its goals are to strengthen trade ties between the parties, increase trade opportunities, and support economic development along this corridor.

The Ministry of Commerce and Industry reports that India has signed 13 free trade agreements (FTAs) with different countries around the world. With Australia, the most recent deal will help India keep up a robust network of international economic cooperation.

Australia is currently India’s 17th-largest trading partner, and India is Australia’s 9th-largest trading partner, according to the Ministry of Commerce and Industry. Australia and India had a $27.5 billion trade surplus in goods and services in 2021.

It is projected that bilateral commerce in products and services between India and Australia will rise from its current value of US$ 27.5 billion to US$ 45 billion in five years once the Economic Cooperation and Commerce Agreement (ECTA) between the two countries is ratified.

Indo-Australian Free Trade Agreement

Through the establishment of a path of reciprocal trade benefits, both countries will be able to grow economically dominant in each other’s markets and promote a range of products and services.

98.3% of Australia’s tariff lines will be available to India without charge on the first day, with the remaining 1.7% being available later. The ECTA ensures the establishment of an institutional setting to assist the growth of commerce between the two countries.

This is quite advantageous, especially for labor-intensive businesses that would otherwise be subject to a 4-5% duty in Australia, like engineering, textiles and apparel, gems and jewellery, leather, and footwear.

However, India will give Australia zero-duty access to 70% of its tariff lines (with 40% beginning on day one and the remaining 30% gradually).

Given that around 96% of Australia’s exports to India are raw materials and intermediate goods, the tariff concessions offered by India will help local and domestic companies obtain less expensive raw materials and improve their competitiveness.

Long-term, it is hoped that this action will strengthen not just the monetary relations between the two nations but also the standard of life and general wellbeing of the populations in both.