India and Australia signed an Economic Cooperation and Trade Agreement (IndAus ECTA) on April 2nd, Saturday, hailing it as a "watershed moment" and "one of the biggest economic doors there is to open in the world." This ambitious free trade agreement (FTA) will provide zero-duty access to 96 per cent of India's exports to Australia, slashing import duties on a wide range of items from Australia, including wines, coal, meat, and wool, as well as pharmaceuticals, textiles, engineering goods, leather, and jewelry from India. Around 85% of Australia's exports, including coal, sheep meat, and wool, will have zero-duty access to the Indian market, while Australian goods would have lower duty access. FTA is largely going to benefit the pharmaceutical sector in India as export activities are likely to boom in India during the forthcoming period.
According to a government estimate, the agreement will increase bilateral trade in products and services to $45-50 billion over the next five years, up from roughly $27 billion now, and will create over one million employments in India. India's export target to reach 500 billion dollars by the fiscal year 2023 is expected to accelerate trade activities in the near term. Both India and Australia have agreed to make concessions in the services sector as well, with both prepared to make professional credentials, licensing, and registration procedures between professional services bodies easier. Australia has agreed to open up new opportunities for young Indians to work in the country during their vacations.
It is India's first Free Trade Agreement (FTA) with a developed country like Australia in more than a decade. In February, India signed a free trade agreement with the United Arab Emirates and is currently discussing agreements with Israel, Canada, the United Kingdom, and the European Union. After the Australian Parliament has ratified the agreement, it is expected to enter into force. Officials claim that obtaining lower-cost raw materials from Australia, such as alumina, is in India's best interests because it will improve Indian firms' worldwide competitiveness. The agreement also includes strong origin limitations to prevent products from being routed through other countries, as well as a safeguard system to deal with any unexpected spikes in product imports.