The latest figures by the Department of Foreign Affairs and Trade show that bilateral trade between India and Australia has reached its highest level ever. According to DFAT,
“The two-way trade in goods and services between Australia and India was valued at $46.5 billion in 2022.”
Bilateral trade between the two countries stood at around $34 billion in the preceding year. India is currently Australia’s sixth-largest trading partner and fourth-largest export market.
Austrade’s Head of South Asia and Senior Trade and Investment Commissioner Catherine Gallagher told The Australia Today, “The Australia and India bilateral relationship is at a historic high.”
“Our growing two-way trade relationship is now supported by our landmark free trade agreement, the Australia-India Free Trade Agreement (AI-ECTA) that came into force in December 2022.
“Lower tariffs have unlocked opportunities for businesses in both countries to grow and diversify across sectors, including agriculture and food, resources and energy, and health.”
The trade growth data of the last three years between Australia and India tells its own story.
- In 2022, India was Australia’s sixth largest trading partner with two-way trade in goods and services valued at over $46 billion. The fourth largest export market of goods and services, valued at $34.8 billion.
- In 2021, India was Australia’s sixth largest trading partner with two-way trade in goods and services valued at $34.2 billion, representing a 41% annual increase. The fourth largest export market of goods and services, valued at $24.5 billion.
- In 2020, India was Australia’s seventh largest trading partner with two-way trade in goods and services valued at $24.3 billion. The sixth largest export market of goods and services, valued at $16.8 billion.
Speaking with The Australia Today, National Chair of Australia India Business Council (AIBC), Jodi McKay said,
“These figures show that the recent efforts by our two nations are having a significant impact on trading volumes. AIBC’s focus has been on raising the profile and opportunities of the ECTA”
“It is pleasing to see businesses on both sides begin to convert the potential of our growing economic relationship. While the figures are impressive- this is just the start.”
Late last year the Australia-India Economic Cooperation and Trade Agreement (ECTA) came into effect after almost a decade of negotiations. The agreement was signed on 2 April 2022 and entered into force on 29 December 2022.
At the time Minister for Trade and Tourism Don Farrell said,
“This agreement reflects the Government’s commitment to diversifying exports and strengthening our partnerships.”
“Australia and India are natural trading partners – this agreement will unlock the enormous potential in our trading relationship,”said Mr Farrell.
He added, “ECTA’s entry into force opens up the world’s largest democracy, with nearly one and a half billion people, to Australian exporters – early entry into force sees Australian exporters receive a tariff cut today, followed by another on 1 January 2023.”
Additionally, given the date on which the agreement came into force, Australia was effectively getting an extra year of tariff cuts on the free trade agreement with India.
Speaking at an event organised by the Australia India Business Council (AIBC) in December, DFAT’s Chief Negotiator for ECTA and CECA (Comprehensive Economic Cooperation Agreement), Frances Lisson, highlighted the significance of the timing of when the agreement was coming into force.
After the ECTA came into force, tariffs on over 85 per cent of Australian exports to India have been eliminated and locked in at zero. These include key exports such as wool, lamb, barley, oats, fresh rock lobsters, cosmetics and many metallic ores, critical minerals, non-ferrous metals, and titanium dioxide.
Tariffs on a further 5 per cent of exports, including macadamia nuts, avocados, berries, seafood, pharmaceuticals, cochlear implants, vitamins, infant formula, breakfast cereals, pasta, sandalwood chips, pumps, and fillers, excavating machinery parts and lifting machinery for mines, are lower now and will be phased down to zero within 6 years.
Australian services suppliers in 31 sectors and subsectors are also guaranteed to receive the best treatment accorded by India to any future free trade agreement partner, including in:
- higher education and adult education
- business services (tax, medical and dental, architectural and urban planning
- research and development
- communication, construction and engineering
- insurance and banking
- hospital, audiovisual and tourism and travel.
Modern commitments have provided for non-discriminatory treatment for Australian service suppliers across a wide range of sectors. There is also improved transparency and predictability around the domestic regulations that apply in India.
India has provided market access for single-brand retailing and franchising, as well as commitments regarding wholesale distribution services. Australian Internet services businesses in India also have more opportunities to expand their portfolio with foreign equity limit of 74 per cent for commercial presence.
ECTA contains separate Annexes on Financial Services, Professional Services, and Telecommunications Services, consistent with the growth opportunities these sectors represent.