India-Australia Economic Cooperation and Trade Agreement

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    • India and Australia signed an Economic Co-operation and Trade Agreement (ECTA) with an eye on doubling bilateral trade to $50 billion in five years and easing the movement of people, goods and services across borders.  
      • The negotiations for India-Australia ECTA were formally re-launched on 30 September 2021 and concluded on a fast-track basis by the end of March 2022.
      • In February, India signed an FTA with the UAE and is currently working on FTAs with Israel, Canada, UK and the European Union.

    Salient Features of India-Australia ECTA

    • The India-Australia ECTA is the first trade agreement of India with a developed country after more than a decade.
      • Free Trade Agreement is a pact between two or more nations to reduce barriers to imports and exports among them.
    • 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, Technical Barriers to Trade (TBT), Sanitary and Phytosanitary (SPS) measures, Dispute Settlement, Movement of Natural Persons, Telecom, Customs Procedures, Pharmaceutical products, and Cooperation in other Areas. 
        • Eight subject-specific side letters covering various aspects of bilateral economic cooperation were also concluded as part of the Agreement.
    • Commitments: 
      • By Australia: 
        • As regards trade in services, Australia has offered wide-ranging commitments in around 135 sub-sectors and Most Favoured Nation (MFN) in 120 sub-sectors which cover key areas of India’s interest like IT, ITES, Business services, Health, Education, and Audiovisual. 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.
      • By India: 
        • On the other hand, India has offered market access to Australia in around 103 sub-sectors and Most Favoured Nation in 31 sub-sectors from the 11 broad service sectors such as ‘business services’, ‘communication services’, ‘construction and related engineering services, and so on.
      • Both sides have also agreed to a separate Annex on Pharmaceutical products under this agreement, which will enable fast track approval for patented, generic and biosimilar medicines.

    Source: ET

    Impact or Benefits

    • ECTA provides an institutional mechanism to encourage and improve trade between the two countries. 
      • Growing India-Australia economic and commercial relations contribute to the stability and strength of a rapidly diversifying and deepening relationship between the two countries. 
    • The ECTA covers almost all the tariff lines dealt in by India and Australia respectively. 
      • India will benefit from preferential market access provided by Australia on 100% of its tariff lines. 
        • This includes all the labour-intensive sectors of export interest to India such as Gems and Jewellery, Textiles, leather, footwear, furniture, food, agricultural products, engineering products, medical devices, and Automobiles. 
        • On the other hand, India will be offering preferential access to Australia on over 70% of its tariff lines, including lines of export interest to Australia which are primarily raw materials and intermediaries such as coal, mineral ores and wines etc.
    • This agreement will facilitate the exchange of students, professionals, and tourists between us, which will further strengthen these relations.
    • It will create new employment opportunities, raise living standards and improve the general welfare of the people of the two countries.
    • It will facilitate work visas for two to four years for Indian students in Australia on a ‘reciprocal basis’ and allow Indian chefs and yoga professionals to work Down Under.
    • 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.

    India Australia Bilateral Relations 

    • Evolution: 
      • The historical ties between India and Australia started immediately following European settlement in  Australia in 1788. 
      • India and Australia established diplomatic relations in the pre-Independence period, with the establishment of the India Trade Office in Sydney in  1941. 
      • India and Australia enjoy excellent bilateral relations that have undergone transformational evolution in recent years, developing along a positive track, into a friendly partnership. 
      • This is a special partnership characterised by shared values of pluralistic, parliamentary democracies, Commonwealth traditions, expanding economic engagement, long-standing people-to-people ties and increasing high-level interaction. 
    • Strategic: 
      • The India-Australia Comprehensive Strategic Partnership initiated during the India-Australia Leaders’ Virtual Summit held between Hon’ble Prime Minister of India His Excellency Shri Narendra Modi and Hon’ble Prime Minister of Australia His Excellency Mr. Scott Morrison MP, on 04 June 2020 is the cornerstone of our multifaceted bilateral relations.
    •  Economic and commercial relations
      • India and Australia have been each other’s, important trading partners. These excellent bilateral economic and commercial relations have continued to enhance and deepen over time. 
      • Growing India-Australia economic and commercial relations contribute to the stability and strength of a rapidly diversifying and deepening bilateral relationship between the two countries. 
      • 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 US$ 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.
    • Quad:
      • 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.
    • Bilateral Engagement:
      • Bilateral mechanisms include high-level visits, Annual Meetings of Prime Ministers, Foreign Ministers’ Framework Dialogue, Joint Trade and Commerce Ministerial Commission, India-Australia ‘2+2’ Foreign Secretaries and Defence Secretaries Dialogue, Defence Policy Talks, Australia-India Education Council, Defence Services Staff Talks, etc.
    • Multilateral Engagement:
      • Both countries have close cooperation in multilateral fora like Food and Agriculture Organization (FAO) and G20.
      • The Quadrilateral Framework (QUAD) of India and Australia along with the US and Japan emphasize the collective resolve to maintain a free, open and inclusive Indo-Pacific region.
    • S&T:
      • An Australia-India Strategic Research Fund (AISRF), which was established in 2006, supports scientists in India and Australia to collaborate on leading-edge research. 
      • AISRF consists of India  Australia Biotechnology Fund; India-Australia Science & Technology Fund; Grand Challenge  Fund and Fellowship Schemes.
    • Defence:
      • In 2014, both sides decided to extend defence cooperation to cover research, development and industry engagement and agreed to hold regular meetings at the level of the Defence Minister conduct regular maritime exercises and convene regular service-to-service talks
      • The first-ever Bilateral Maritime Exercise, AUSINDEX, was conducted in Visakhapatnam (Bay of Bengal) in September 2015.
      • In 2018, the Indian Air Force participated for the first time in Exercise Pitch Black in Australia.
      • INS Sahyadri participated in Kakadu, the biennial exercise of the Australian Navy held in 2018, in which 27 nations participated. 
      • The 4th edition of AUSTRAHIND (Special Forces of Army Exercise) was held in September 2019.

    Source:TH