Piyush Goyal, minister of commerce and industry, on Wednesday said that the free trade agreement (FTA) between India and Australia will come into force from December 29. The FTA, a move which will help in almost doubling the bilateral commerce to $45-50 billion in around five years.
Goyal said the implementation of the free trade pact "is the dawn of a whole new era". "India & Australia consolidate their long-standing partnership. Economic Cooperation & Trade Agreement, realised under the guidance of leaders on both countries, comes into effect from December 29, 2022. It is the dawn of a whole new era for our businesses & people," Goyal said in a tweet.
The agreement, which was signed on April 2, would provide duty-free access to Indian exporters of over 6,000 broad sectors, including textiles, leather, furniture, jewellery and machinery in the Australian market.
"The (Anthony) Albanese government welcomes confirmation today that the Indian Government has completed its domestic requirements to enable implementation of the Australia-India Economic Cooperation and Trade Agreement (ECTA)," Australian Minister for Trade and Tourism Don Farrell said in a statement on Wednesday. "This trade agreement will deliver new market access opportunities for Australian businesses and consumers from 29 December 2022," the statement said.
Labour-intensive sectors which would gain immensely include textiles and apparel, few agricultural and fish products, leather, footwear, furniture, sports goods, jewellery, machinery, and electrical goods.
Under the pact, 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 that currently attract 4-5 per cent customs duty in Australia.
India's goods exports to Australia stood at $8.3 billion and imports from the country aggregated to $16.75 billion in 2021-22.
The statement said that from 29 December, tariffs on 85 per cent of Australia's exports to India will be eliminated and high tariffs on a further 5 per cent of goods will be phased down.
"Entry into force of the agreement before the New Year delivers a double bonus of two tariff cuts in quick succession: one as the agreement comes into effect and a second on 1 January 2023," it said. It added that ECTA will save Australian exporters around $2 billion a year in tariffs, while consumers and business will save around $500 million in tariffs on imports of finished goods, and inputs to "our manufacturing sector".
The tariff commitments provided by India in the agreement will open up access for Australia's exporters of products including critical minerals, pharmaceuticals, cosmetics, lentils, seafood, sheepmeat, horticulture and wine, it said. Also it said that Australian service suppliers will benefit from full or partial access across more than 85 Indian services sectors and subsectors. Australian suppliers across 31 sectors and subsectors will be guaranteed the highest standard of treatment that India grants to any future free trade agreement partner.
ECTA will also support tourism and workforce needs in regional Australia by making 1,000 work and holiday programme places available to young Indians, it said adding the pact maintains opportunities for Indian students graduating in Australia to undertake post-study work, with a bonus year of stay for high-performing STEM (science, technology, engineering, or mathematics) graduates.
Australian Prime Minister Anthony Albanese said that the agreement is the next step in elevating our relationship with India, the world's fastest growing large economy.