India, Australia sign landmark free trade deal in push for bilateral ties

India-Australia-trade-agreement.jpeg

Indian Prime Minister Narendra Modi speaking at the virtual signing ceremony of the India-Australia Economic Cooperation and Trade Agreement on April 2, 2022. Photo/PIB

India and Australia on Saturday signed a landmark economic cooperation deal that will help the two countries boost bilateral trade at a time when they are looking at an alternative to China.

The deal will allow India access to natural resources-rich nation, as New Delhi works to expand its manufacturing base.

It is the first trade agreement of India with a developed country after more than a decade, a government statement said, adding that the deal encompasses cooperation across the entire gamut of bilateral economic and commercial relations between the two countries, and covers areas like trade in goods, rules of origin, trade in services, technical barriers to trade, sanitary and phytosanitary 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, the statement added.

The agreement was inked by India’s Commerce and Industry Minister Piyush Goyal and Australia’s Minister for Trade, Tourism and Investment Dan Tehan in a virtual ceremony in the presence of Indian Prime Minister Narendra Modi and his Australian counterpart Scott Morrison.

“This is a watershed moment for our bilateral relations. On the basis of this agreement, together, we will be able to increase the resilience of supply chains, and also contribute to the stability of the Indo-Pacific region,” Modi said.

Morrion said the pact would further deepen the already strong relations between the two countries.

Preferential market access

The agreement provides for an institutional mechanism to encourage and improve trade between the two countries and 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 labor-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, the statement said.

“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,” it added.

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.

Leave a Reply

Your email address will not be published.