Cheaper exports and bigger opportunities: Australia strikes interim trade agreement with India

By Melissa Coade

April 4, 2022

Scott Morrison
Scott Morrison speaks with Indian prime minister Narendra Modi during a virtual leaders’ summit in Brisbane, Monday, March 21, 2022. (AAP Image/Jono Searle)

Australia and India are one step closer to a full Comprehensive Economic Cooperation Agreement, with an historic deal struck at the weekend to lift tariffs on more than 85% of Australian goods exports to India.

The tariff cut is valued at more than $12.6 billion a year, and will rise to almost 91% (valued at $13.4 billion) over 10 years under the new deal. A total of 96% of Indian goods imports entering Australia duty-free on entry is also a feature of the agreement. 

Another major agreement of the deal is the mutual recognition of professional qualifications, licensing, and registration procedures between professional services bodies in both countries.

The Australia-India Economic Cooperation and Trade Agreement (AI ECTA) was signed on Saturday during a virtual ceremony.

India’s minister of commerce & industry, consumer affairs & food & public distribution and textiles, Piyush Goyal, Australian trade minister Dan Tehan, and Prime Ministers Scott Morrison and Narendra Modi participated in the signing ceremony. 

In a statement, Tehan noted India was the third largest market for Australian services exports in 2020.

“This agreement will turbocharge our close, long-standing and highly complementary economic relationship in areas such as critical minerals, professional services, education and tourism,” Tehan said.

“It will create new opportunities for jobs and businesses in both countries, while laying the foundations for a full free trade agreement.”

Australia’s STEM and IT workforces will also benefit from the terms of the deal, with a new access scheme for young Indians to participate in working holidays in Australia. One thousand places per year will be available under Australia’s Work and Holiday program (to be established over the next two years) with a view to boosting the workforce requirements and tourism industry in Australia.

Morrison said the deal would achieve ‘trade diversification opportunities’ valued at $14.8 billion each year.

“This agreement opens a big door into the world’s fastest-growing major economy for Australian farmers, manufacturers, producers and so many more,” the pm said, alluding to an enhanced MOU for agriculture in the works.

“By unlocking the huge market of around 1.4 billion consumers in India, we are strengthening the economy and growing jobs right here at home,” Morrison said. 

The government said the new deal gave Australian services suppliers in 31 sectors and sub-sectors ‘best treatment accorded by India to any future free trade agreement partner’. This included the areas of higher education and adult education; business services (tax, medical and dental, architectural and urban planning; research and development; communication, construction and engineering; insurance and banking; hospital; audio-visual; and tourism and travel.

“This is great news for lobster fishers in Tasmania, wine producers in South Australia, macadamia farmers in Queensland, critical minerals miners in Western Australia, lamb farmers from New South Wales, wool producers from Victoria and metallic ore producers from the Northern Territory,” Morrison said. 

“This agreement has been built on our strong security partnership and our joint efforts in the Quad, which has created the opportunity for our economic relationship to advance to a new level.”

Some benefits of the new AI ECTA include Benefits of AI ECTA include a 30% elimination of sheep meat tariffs on entry into force, and removal of the 2.5% tariffs on wool on entry into force, supporting Australia’s second-largest market for wool products.

The resources sector is also a major winner from the deal, benefitting from the elimination of tariffs on entry into force for coal, alumina, metallic ores, including manganese, copper and nickel; and critical minerals including titanium and zirconium. LNG tariffs will be bound at 0% at entry into force.


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