Leslie Massey
The Australia-India Economic Cooperation and Trade Agreement (AI-ECTA or INDAUS ECTA) is a free trade agreement between India and Australia. It was signed on April 2, 2022, and came into force on December 29, 2022. The agreement aims to strengthen the economic ties between the two countries by reducing tariffs and improving market access for goods and services. As a result of the agreement, over 85% of Australian goods exports to India are now tariff-free, rising to 90% by 2026. Similarly, 96% of imports from India to Australia are now tariff-free and will increase to 100% by 2026.
| Characteristics | Values |
|---|---|
| Name of the agreement | India-Australia Economic Cooperation and Trade Agreement (INDAUS ECTA) |
| Signed on | 2 April 2022 |
| Entered into force | 29 December 2022 |
| Tariff-free Australian goods exports to India | 85% by value, rising to 90% by 1 January 2026 |
| Tariff-free imports from India | 96% rising to 100% by 1 January 2026 |
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What You'll Learn
The India-Australia Economic Cooperation and Trade Agreement (INDAUS ECTA)
INDAUS ECTA is an important step in strengthening the economic ties between India and Australia. Over 85% of Australian goods exports to India are now tariff-free, and this figure will rise to 90% by 1st January 2026. High tariffs have been reduced on certain agricultural products as well. The agreement also makes 96% of imports from India tariff-free, with the aim of reaching 100% by 1st January 2026.
The agreement provides Australian businesses with enhanced access to India's fast-growing market of over 1.4 billion people, offering a competitive advantage and opportunities for trade diversification. It also helps Australian businesses expand into the Indian market, with resources like the Go Global Toolkit, which simplifies navigating India's laws, regulations, and tariffs.
INDAUS ECTA is an interim agreement, with negotiations for a more comprehensive economic cooperation agreement (CECA) currently ongoing. The CECA will build on the foundation laid by INDAUS ECTA to further enhance the economic relationship between India and Australia.
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Tariff-free exports
The Australia-India Economic Cooperation and Trade Agreement (ECTA) is a free trade agreement between India and Australia. It was signed on 2 April 2022 and came into effect on 29 December 2022. The agreement provides for tariff-free exports between the two countries.
Under the ECTA, over 85% of Australian goods exports to India by value are tariff-free, with this figure rising to 90% by 1 January 2026. Additionally, high tariffs on certain agricultural products have been reduced. This includes a range of products such as avocados, almonds, cherries, berries, oranges, and table grapes.
For imports from India, the agreement is even more favourable, with 96% of imports currently tariff-free and this figure rising to 100% by 1 January 2026. This applies to a wide range of products, including engineering goods, gems and jewellery, and leather products.
The ECTA is expected to boost trade between the two countries and provide opportunities for businesses in both India and Australia to diversify their trade. It is also seen as a step towards a more comprehensive economic cooperation agreement (CECA) between the two countries, which is currently under negotiation. The CECA aims to build on the ECTA to foster even closer economic ties between India and Australia.
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Access to India's fast-growing market
The Australia-India Economic Cooperation and Trade Agreement (ECTA) came into force on 29 December 2022. The agreement opens up access to India's fast-growing market of over 1.4 billion people, giving Australian businesses opportunities for trade diversification.
Under the ECTA, 96% of imports from India are now tariff-free, with the remaining 4% to become tariff-free by 1 January 2026. Similarly, 85% of Australian goods exports to India by value are now tariff-free, with the remaining 15% to be tariff-free by 1 January 2026. Tariff reductions have been implemented on agricultural products such as zirconium, titanium, manganese, copper, nickel, cobalt, aluminium, tin ores, and bituminous coal.
The ECTA also provides for the elimination of tariffs on critical minerals, such as copper alloys and nickel products, and on wood and wood products, including sandalwood chips. The agreement has already had a significant impact on trade between the two countries, with the value of exports to India increasing by 106% in the year after the ECTA entered into force.
India is Australia's seventh-largest trading partner, and Australian resources and commodities such as wool and cotton are important inputs for Indian industries. Australian services are also increasingly sought after in India, with services exports nearly doubling in value over the past decade. The ECTA will enable Australian goods exporters to obtain preferential access to the enormous untapped Indian market, with Indian tariffs on over 90% of Australia's goods exports to India by value to be eliminated.
The ECTA is a stepping stone towards a full Australia-India Comprehensive Economic Cooperation Agreement (CECA). It will secure Australia's foothold in the world's fastest-growing major economy and enable Australian businesses to unlock or expand their operations in a market of nearly one and a half billion people.
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Negotiations for a Comprehensive Economic Cooperation Agreement (CECA)
Australia and India first launched negotiations for a Comprehensive Economic Cooperation Agreement (CECA) in May 2011. Both countries decided to suspend negotiations in 2016, pending the outcome of other plurilateral regional agreements.
In September 2021, Australia and India formally re-launched CECA negotiations with the intention of swiftly concluding an Economic Cooperation and Trade Agreement (ECTA) to liberalise and deepen bilateral trade in goods and services. The ECTA was signed on 2 April 2022 and entered into force on 29 December 2022.
The ECTA has made over 85% of Australian goods exports by value to India tariff-free, increasing to 90% by 1 January 2026. It has also reduced high tariffs on some agricultural products. Similarly, 96% of imports from India are now tariff-free, rising to 100% by 1 January 2026.
Negotiations are ongoing for a Comprehensive Economic Cooperation Agreement (CECA), which will build upon the outcomes of the ECTA to develop closer economic ties between Australia and India. The CECA negotiations are expected to cover trade in goods, services, investment, and related issues. Submissions are invited from all stakeholders to inform the CECA negotiations.
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Bilateral trade in goods and services
The India-Australia Economic Cooperation and Trade Agreement (INDAUS ECTA) was signed on 2 April 2022 and came into force on 29 December 2022. The agreement is Australia's first step towards a free trade pact with India, and it aims to liberalise and deepen bilateral trade in goods and services between the two countries.
Over 85% of Australian goods exports by value to India are now tariff-free, and this will increase to 90% by 1 January 2026. High tariffs have been reduced on some agricultural products. Additionally, 96% of imports from India are now tariff-free, rising to 100% by 1 January 2026. This agreement helps Australian businesses gain a competitive advantage and access the fast-growing Indian market of over 1.4 billion people. It also provides opportunities for trade diversification and boosts investment between the two countries.
The agreement covers various aspects of bilateral trade in goods and services. It includes provisions on initial provisions and general definitions, trade in goods, rules of origin, customs procedures, sanitary and phytosanitary measures, technical barriers to trade, trade remedies, and other related areas. The specific details of these provisions can be found in the publicly available INDAUS ECTA document.
The INDAUS ECTA is an interim agreement, and negotiations are ongoing for a more comprehensive economic cooperation agreement (CECA). The CECA will build upon the outcomes of the ECTA to further enhance economic ties between India and Australia. It will address a broader range of issues and aim to capitalise on the potential for closer economic cooperation between the two countries.
The INDAUS ECTA is a significant development in the bilateral relationship between India and Australia, providing a framework to facilitate and enhance trade and investment flows between the two countries. It remains to be seen how effectively this agreement will be implemented and what additional benefits the CECA will bring to further strengthen bilateral economic ties.
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Frequently asked questions
Yes, the India-Australia Economic Cooperation and Trade Agreement (INDAUS ECTA) was signed on April 2, 2022, and came into effect on December 29, 2022.
The agreement aims to strengthen economic ties between the two countries. It provides Australian businesses with a competitive advantage and access to India's fast-growing market of over 1.4 billion people, with 85% of Australian goods exports by value to India being tariff-free.
Negotiations for the CECA are ongoing, building upon the outcomes of the ECTA to further enhance economic cooperation between the two countries.
