Why is it in the news?

• The India-Australia Economic Cooperation and Trade Agreement (ECTA), recently completed one year.
• It’s a bilateral free trade agreement signed on December 2, 2022 and came into effect on December 29, 2022.

Objectives of ECTA

• Boost bilateral trade and investment by removing tariffs and trade barriers.
• Enhance market access for Indian and Australian goods and services in each other’s markets.
• India agrees to Negative listing after 5 years, treating imported and locally produced goods/services equally, with exceptions listed in the negative list.
• Aims to streamline customs procedures to save time and costs for cross-border trade.
• Encourages regulatory cooperation, including the harmonization of technical standards and regulations.

Expected Benefits for India

• Duty-free access for 96.4% of India’s exports to Australia, including textiles, agriculture, and leather products.
• Exports expected to increase by $10 billion by 2026-27.
• Total bilateral trade expected to surpass US $45-50 billion by 2035.
• Anticipated creation of approximately 10 lakh new jobs in various sectors in India.
• Potential for increased foreign investment due to improved market access and a more predictable regulatory environment.

Achievements So Far

• India’s exports to Australia grew by 14% year-on-year to $5.87 billion between April and November 2023.
• Imports contracted by 19% year-on-year to $11.46 billion in the same period.
• Trade deficit reduced to $5.2 billion between April and November 2023, compared to $8.6 billion a year ago.
• Agricultural exports from Australia to India increased by 50% since the agreement came into force.
• However, Challenges include differences in regulatory standards and potential implementation issues.

Conclusion

• Continued dialogue and collaboration between India and Australia are crucial to maximizing the benefits of the agreement.
• Successful implementation could pave the way for further cooperation, contributing to regional economic growth and development.
• Ongoing negotiations for concluding the Comprehensive Economic Cooperation Agreement (CECA) between India and Australia, but no defined deadline at present.