India-Australia trade agreement will come into effect on December 29

India-Australia trade agreement: A trade agreement between India and Australia is poised to enter into force on December 29 after the Indian government finalised the domestic conditions for its implementation, benefiting the country's IT industry, students, and labor-intensive sectors.
The Australian government appreciated the Indian side's statement on Wednesday that all prerequisites for the implementation of the Economic Cooperation and Trade Agreement (ECTA), which was signed on April 2, had been met. This was India's first trade agreement with a developed country in a decade.
With the unanimous passage of government laws through both houses of Parliament last week, Australia completed its domestic conditions for the trade agreement.

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According to an Australian government statement, the execution of the agreement will result in two tariff decreases by January 1.

"From December 29th, tariffs on 85% of Australia's exports to India will be abolished, while high tariffs on the remaining 5% of commodities will be phased out."

The deal's entry into force before the New Year brings a double bonus of two tariff reduction in short succession: one when the agreement enters into force and a second on January 1, 2023," according to the statement.
Australia's high commissioner, Barry O'Farrell, took to Twitter saying, "The date is set! The Economic Cooperation and Trade Agreement will enter into force on 29 December, delivering new market access opportunities for both countries & securing the [Australia-India] friendship in the decades to come.” 

According to Indian officials, the agreement will increase two-way commerce from $31 billion to $45 billion to $50 billion in five years, while India's item exports to Australia will increase from $7 billion to $10 billion by 2026-27. They claim that two-way trade has the potential to produce more than a million new employment in India, as well as increase remittance flows to the country.

ECTA will save Australian exporters around $2 billion in tariffs each year

According to the announcement, ECTA will save Australian exporters around $2 billion in tariffs each year, while consumers and companies will save approximately $500 million in tariffs on imports of completed goods and inputs for Australia's manufacturing sector.

Tariff promises made by India in the agreement will allow Australia's products such as essential minerals, pharmaceuticals, cosmetics, lentils, fisheries, sheepmeat, horticulture, and wine to get access.

Australian service providers will gain full or partial access to over 85 Indian service sectors and sub-sectors. Australian suppliers in 31 sectors and sub-sectors will be given the same treatment that India gives to any future free trade agreement partner.

Higher education and adult education, as well as business services such as tax, architecture, and urban planning, will benefit in Australia.

ECTA will also boost regional Australia's tourism and labour requirements by delivering 1,000 work and holiday opportunities to young Indians. It will also allow Indian students who graduate in Australia to work post-graduately, with an additional year of stay for high-performing STEM grads.
To complement ECTA, India and Australia are working on a Comprehensive Economic Cooperation Agreement.  “The Australian government is pursuing further opportunities in goods and services, in addition to new commitments in areas such as digital trade, government procurement, and new areas of cooperation,” according to the statement.

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Australian Prime Minister about the agreement

Australian Prime Minister Anthony Albanese remarked, "Australia and India are increasingly working together as strategic and economic partners...The Australia-India Economic Cooperation and Trade Agreement is the next step in elevating our relationship with India, the world’s fastest-growing large economy.” 

India is Australia's ninth-largest trading partner, and the trade balance favours Australia. Two-way commerce in goods and services was worth $27.5 billion in 2021, with India's exports worth $10.5 billion and imports worth $17 billion.
Between 2019 and 2021, India's merchandise exports to Australia increased 135%.

Australia's primary exports are refined petroleum, pharmaceutical products, pearls and gems, jewellery, made-up textile articles, and women's clothing, while India's primary imports are coal, copper ores and concentrates, natural gas, ferrous and nonferrous waste and scrap, and education-related services.

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