The Next Phase of India-Australia Economic Partnership

By siliconindia   |   Tuesday, 09 January 2024, 20:18 IST
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The Next Phase of India-Australia Economic Partnership

The India-Australia Economic Cooperation and Trade Agreement (ECTA) has proven to be mutually beneficial, promoting significant export growth for both nations within a year of its enactment.

India and Australia mark a year of mutual benefits achieved through the India- Australia Economic Cooperation and Trade Agreement (ECTA), demonstrating substantial trade gains and a shared dedication to bolster their economic partnership. While discussions persist for a comprehensive trade deal, the interim ECTA has already earned tangible outcomes for both countries' farmers, manufacturers, and universities.

Elevated Trade and Diversification

Official data reveals that India experienced a 14 percent year-on-year surge in exports to Australia, amounting to $5.87 billion from April to November 2023. significantly, exports under preferential terms yielded a 17.8 percent increase, exhibiting the impact of ECTA.  Conversely, Australia observed a 50 percent rise in agricultural exports to India, led by prominent contributors like sheep meat, seafood, and almonds. Industrial exports also saw a considerable 30 percent upswing, driven by sectors encompassing pharmaceuticals, wood and paper products, and cochlear implants.

Emphasis on Agriculture and Manufacturing

The influence of ECTA on agriculture stands particularly noteworthy. Australian farmers have seen a considerable rise in demand for their products, translating to a diversified Indian import portfolio and the opening up of novel marketplaces. This resonates with India’s growing interest in high-quality food products and Autrialia’s expertise in sustainable agriculture. Similarly, the boost in manufacturing exports from Australia pinpoints the potential for intensive economic integration and knowledge sharing between the two countries.

Building on Early Success

Talks on the third round of tariff cuts are progressing and are expected to enable further trade liberalization for both nations. Australian exports of seafood, cherries, sandalwood, and wine are poised to drive competitiveness in the Indian market, while Indian steel and aluminum producers can expect a reduction in tariffs. This ongoing tariff minimization is expected to further fuel bilateral trade and create opportunities for improved investments in both directions.

Moving Towards a Comprehensive Agreement

While the ECTA has generated positive results, both countries are proactively negotiating for a Comprehensive Economic Agreement (CECA). This ambitious pact focuses on expanding the scope of engagement beyond trade in goods, encompassing services, investment, and intellectual property. Although a specific timeline for concluding the CECA has not been officially announced, the commitment from both sides underlines their shared vision for deeper economic partnerships.

The success of ECTA within a short-term period lays a solid foundation for the future of India-Austrailia economic relations. The rising trade volumes, diversification of exports, and focus on key sectors such as agriculture and manufacturing bode well for a resilient economic partnership. As discussions for the CECA advance, both countries have an opportunity to solidify their roles as significant contributors in the Indo-Pacific region, promoting sustainable growth and mutual prosperity.