Exploring the Impact of ECTA on India- Australia Relations

By siliconindia   |   Tuesday, 09 January 2024, 01:40 IST
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Exploring the Impact of ECTA on India- Australia Relations

ECTA stands as a model for future trade agreements, laying the foundation for a future marked by prosperity and interconnectedness for India and its trading partners.

A year after its commencement, the India- Australia Economic Cooperation and Trade Agreement (ECTA) stands as a symbol of  India’s meticulous planning and execution in forging mutually beneficial trade partnerships. This crafted agreement, developed through extensive stakeholder consultations, reflects the world view of a confident and aspirational New India, and its notable influence within a brief period is evident.

Fortifying Strategic Partnership

ECTA bolsters the longstanding bond between India and Australia, two vibrant democracies that uphold the rule of law and possess similar legal systems. Both countries stand united within the Quad and the Supply Chain Resilience Initiative (SCRI) and proactively collaborate within frameworks such as the Indo-Pacific Economic Framework for Prosperity (IPEF). This agreement is evidence of their shared vision of a stable and prosperous Indo-Pacific region.

Enhancing Trade and Entrepreneurship

Marked as India’s initial trade pact with a developed nation in more than a decade, ECTA holds immense potential. India primarily imports raw materials and intermediate goods from Australia while exploring finished goods. Additionally, ECTA aids in minimizing input costs for  Indian entrepreneurs,  bolstering the competitiveness of their goods, both in domestic and international markets. This advancement supports the expansion of Indian startups, providing them with significant opportunities for substantial scaling.

Job Creation and Market Access

ECTA is anticipated to generate a significant number of jobs in labor-intensive sectors as Indian products gain fully duty-free access to the vast Australian market. In April- November 2023, India’s merchandise exports to Australia surged by 14 percent, outperforming its global trade performance despite a challenging global climate. While Australia's overall imports decreased by 4 percent, its purchases from India witnessed a notable upswing, pinpointing the agreement’s effectiveness.

Exploring Novel Export Avenues

Exports to Australia under preferential lines have grown considerably in job-creating sectors. Engineering goods recorded a 24 percent, readymade garments saw a 27 percent rise, and electronics and plastic exports outperformed the overall sector growth. Additionally, India is diversifying its trade basket by exporting over 700 novel items to Australia, encompassing smartphones, gems and jewelry, light oils, and non-industrial diamonds. This marks a significant expansion of India’s export offerings to Australia.

India’s dedication to becoming a developed nation by 2047 aligns with its trading partners. Australia recognizes this strength and values India’s concerns about safeguarding sensitive sectors like agriculture and dairy. The confidence in India’s growth trajectory, investor-friendly policies, and game-changing reforms have elevated India’s appeal for Australian businesses. Subsequently, the total Foreign Direct Investment (FDI)  from Australia rose to $307.2 million in January- September 2023, a notable seven times higher than the figure for the entire year of 2022.