Commerce Minister Goyal Sets Bolder Vision Of $100 Billion India-Australia Trade By 2030 Under ECTA

by Swarajya Staff - Apr 6, 2022 07:12 PM +05:30 IST
Commerce Minister Goyal Sets Bolder Vision Of $100 Billion India-Australia Trade By 2030 Under ECTAPiyush Goyal (left) and Dan Tehan (right). (PC: Twitter/@PiyushGoyal)
Snapshot
  • India and Australia are partners in the trilateral Supply Chain Resilience Initiative arrangement along with Japan which seeks to enhance the resilience of supply chains in the Indo-Pacific Region.

    The IndAus ECTA will pave way for vertical movement in the value chain with increasing presence of higher value products of advanced technology.

The India-Australia Free Trade Agreement has just become more ambitious. Days after Commerce Minister Piyush Goyal inked the India-Australia Economic Cooperation and Trade Agreement (IndAus ECTA) with his Australian counterpart Dan Tehan envisaging enhanced bilateral trade in goods and services to the tune of $50 billion, the Minister, in Australia, on an outreach mission, has set a target of taking the two-way trade to $100 billion by 2030.

Describing the initial expectation of ramping up the two-way flow of goods and services from the current $26-27 billion as a modest target, Goyal suggested that the teams on both sides work out, sector by sector, the potential of a $100 billion engagement between India and Australia by 2030.

“Eight years is more than what is required. We are looking at quadrupling our relationship in 8 years,” Goyal said, addressing the University of Melbourne along with his Australian counterpart Dan Tehan on Wednesday (6 April).

The Minister’s Australia visit comes amidst India’s first ever trade agreement with a developed economy after more than a decade and at a time when India will want to send out a signal to other developed countries such as UK, Canada and the EU with whom it is currently negotiating for FTAs.

Hence in a timely widening of the narrative on the IndAus ECTA, India and Australia could be looking at tapping the investible surplus on either side – India’s 1.3 billion strong demographic dividend with huge appetite for digital connect and better quality of life driving government’s agenda of creating new infrastructure. Australia’s investible surplus is in the form of money which can get a huge opportunity to invest in India’s $1.4 trillion infrastructure pipeline in the next 10-12 years.

In the wider and bolder narrative, India and Australia are planning a collective engagement for an outreach to the world which can have far-reaching implications for the economies.

The IndAus ECTA, is an important development for India in many ways and sets the stage for a multifaceted economic relationship which will facilitate this collective approach of New Delhi. “It is a great step forward. India has played its cards well,” Ravneet Pawha, Deputy Vice President (Global Alliance, Deakin University told Swarajya.

“The ECTA is comprehensive, bringing in mining, minerals, agriculture, commodities, technology. Australia is a good test centre for India in terms of incubation and technology and a good partner in education and skilling,” he added.

Bilateral economic and commercial relations have continued to grow as India’s merchandise exports rose 135 per cent between 2019 and 2021. India’s exports consist primarily of a broad-based basket largely of finished products and were $6.9 billion in 2021. India’s merchandise imports from Australia were $15.1 billion in 2021, consisting largely of raw materials, minerals and intermediate goods.

In the new order of things, the ECTA provides for an institutional mechanism to encourage and improve trade between the two countries by covering almost all the tariff lines dealt in by India and Australia, respectively. India will benefit from preferential market access provided by Australia on 100 per cent 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, and agricultural products, engineering products, medical devices, and automobiles.

On the other hand, India will be offering preferential access to Australia on over 70 per cent 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.

Importantly, Indian exports will have immediate market access at zero duty for 98 per cent of tariff lines from day one of the entry into force of the agreement. Exports in labour-intensive sectors are currently subjected to import duty of 4-5 per cent by Australia, such as most textiles and apparel, a few agricultural and fish products, leather, footwear, furniture, sports goods, jewellery, machinery, electrical goods, railway wagons, selected pharmaceutical products, medical devices and furniture etc. will gain from immediate duty-free access.

Moreover, since Australian exports are more concentrated in raw materials and intermediates, many industries in India will get cheaper raw materials and make them competitive, in particular for sectors like steel, aluminium, fabric/garments etc.

India has kept many sensitive products in the exclusion category (29.8 per cent of tariff lines) without offering any concession. Some of these are milk and other dairy products, chickpeas, walnut, pistachio nut, wheat, rice, bajra, apple, sunflowers seed oil, sugar, oil cake, gold, silver, platinum, jewellery, iron ore and most medical devices. This is a major gain for India in this Agreement.

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 audio-visual.

A key offers from Australia in the services space is access for young Indians to participate in working holidays in Australia. The programme will be implemented within two years and will allow up to 1,000 Indian youngsters in a year to holiday in Australia while working and earning money. This is expected to contribute to both workforce requirements and to boost tourism to support Australia’s post-COVID recovery.

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. The IndAus ECTA will pave way for vertical movement in the value chain with increasing presence of higher value products of advanced technology such as engineering, electronics, pharmaceuticals and medical devices.

Also Read: India Achieves All-Time High Annual Merchandise Exports Of $417.81 Billion In FY22

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