Commerce and Industry Minister Piyush Goyal stated that India expects to trade with Australia for USD 50 billion over the next five years. He also stated that the government has discussed promoting sports, upgrading sports facilities in India, and the wine industry, in addition to the traditional sectors, at an event in Mumbai to mark the entry into force of the India-Australia Economic Cooperation and Trade Agreement (ECTA).
He stated that the government anticipates bilateral trade reaching USD 50 billion in the next 4-5 years.
He added that the government’s vision is to expand in non-traditional areas such as sports goods and the wine industry.
The minister emphasised that the pact excludes sensitive areas and protects India’s dairy and farmers.
“The Agreement will also eliminate Double taxation on IT services which were making us less competitive and making us less profitable in IT sector, the double taxation has now been removed by amending the law, from 1st April, double taxation for IT sector will be over, we will save millions and millions of dollars right now, and over a billion dollars going forward, maybe 5 – 7 years going forward, giving us competitive edge and also creating a lot many jobs,” Goyal said.
Goyal also stated that India expects to sign two free trade agreements (FTAs) next year, referring to a trade agreement with the United Kingdom and an Early Progress Agreement. He stated that talks with the United Kingdom, the European Union, and Canada will take place next month.
The trade agreement (ECTA) was signed on April 2, and the negotiations took a record 88 days.
Goyal stated that even before officials from India and Australia met in New Delhi on September 30, 2021 to announce the resumption of negotiations, ministers from both countries had already reached an agreement over coffee and lunch.
After handing over certificates of origin to the first Indian goods sent to Australia following the agreement, Goyal stated that the ECTA will benefit a variety of industries, including textiles, gems and jewellery, and information technology, which will benefit from the elimination of double taxation.
“Australia, which is largely dependent on imports, will benefit hugely, they will soon start seeing a lot more finished goods coming in from India, providing huge amount of work and job opportunities in both goods and services, provided by Indian talent,” he said
According to Goyal, the agreement is a win-win document with complementarities as its fundamental building block, as India will gain access to cheaper raw materials like coal from Australia, while finished Indian goods will have a market there.
The ECTA allows 98 per cent of Indian exports by value to enter Australia duty-free.
The Indo-Australia ECTA provides an institutional mechanism to encourage and improve bilateral trade. It covers almost all of India’s and Australia’s tariff lines.
Australia will provide India with preferential market access on 100 per cent of its tariff lines, including all labour-intensive export sectors of 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 provide preferential access to Australia on more than 70 per cent of its tariff lines, including lines of export interest to Australia, such as coal, mineral ores, and wines.
It is estimated that ECTA will generate an additional 10 lakh jobs in India. Yoga teachers and chefs from India are expected to fill the annual visa quota. Under the ECTA, over 1 lakh Indian students would be eligible for a post-study work visa (for 18 months to 4 years). According to the PIB statement, the agreement is also likely to increase investment opportunities, promote exports, create significant additional employment, and facilitate strong bonding between the two countries.