India-Australia FTA to help bilateral trade cross $70 bn in next 5 years | Business Standard News

Clipped from: https://www.business-standard.com/article/economy-policy/india-australia-fta-to-help-bilateral-trade-cross-70-bn-in-next-5-years-122122900412_1.html

FTA between India and Australia will help boost bilateral trade in goods and services to cross $70 billion in the next five years, according to economic think tank GTRI

India-Australia ties

The free trade agreement (FTA) between India and Australia, which comes into effect from Thursday, will help boost bilateral trade in goods and services to cross USD 70 billion in the next five years, according to economic think tank GTRI.

The India-Australia Economic Cooperation and Trade Agreement (ECTA) has come into force from December 29.

Global Trade Research Initiative (GTRI) said trade of value USD 23 billion would become duty-free from day one.

This is 93 per cent of merchandise trade of USD 25 billion in 2021-22 between India and Australia. This creates opportunities for more trade in tough times. GTRI estimates suggest that the bilateral trade will cross USD 70 billion in the next five years due to buoyant trade relations and Australia’s gradual weaning away from China, GTRI Co-founder Ajay Srivastava said in a statement.

India’s goods exports to Australia stood at USD 8.3 billion and imports from the country aggregated to USD 16.75 billion in 2021-22.

He said while India’s exports are diversified, ranging from agriculture, garments, and railway engines to telecom, 95 per cent of India’s imports from Australia are raw materials and mining products needed by industry.

This makes the two countries gain from both exports and imports, he added.

He also said this agreement will be an antidote for Australia’s China troubles.

They will negotiate in many new areas like digital trade and government procurement.

“India has negotiated ECTA well; it needs to use similar prudence in dealing with new subjects, Srivastava said.

Under the agreement, Australia is allowing duty-free import of all Indian products. Key gainers will be India’s labour-intensive exports. Duty on these will decrease from the current four-five per cent to zero.

These goods include textiles, apparel, footwear, furniture, sports goods, jewellery, machinery, railway wagons, and medicines.

The onus is now on the Indian industry to translate this advantage into increase in exports, he said.

Coal accounts for three-fourths of Indian imports from Australia. LNG, alumina, and manganese are other vital imports.

He added that the Indian power sector will gain from cheaper coal and domestic factories will gain from cheaper minerals and intermediates.

Australian wine will gain from reduced-duty access to the Indian market. India charges 150 per cent duty on wines, the highest on any product in India.

Under ECTA, Australian wines priced above USD 5 for a 750ml bottle can enter India at reduced duties. This pact also allows limited quantities of Australian almonds, pears, oranges, and mandarins.

No threat to local produce is seen as India already imports these products in large values, India has exercised prudence in opening its market. It did not provide any concession on dairy products, wheat, rice, bajra, apple, sugar, oil cake, etc. to protect the interest of farmers, he said.

Overall, India allows duty-free import of Australian products covered under 40 per cent tariff lines (or product categories) immediately. India will make duty on additional 30 per cent tariff lines zero over a period ranging from 3 to 10 years.

In terms of value, 85.3 per cent of Australian goods will enter India duty-free immediately. This figure will rise to 89.7 per cent in 10 years, he said.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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