India, Australia ink trade pact reducing tax on multiple commodities; check details

In a historic move, India and Australia have signed a trade deal intending to reduce import tax on multiple commodities. The latest development came during the Australia-India Economic Cooperation, in which the trade ministers of both countries inked the India-Australia Economic Cooperation and Trade Agreement (IndAus ECTA) virtually.

Calling the agreement "historic", Australian trade Minister Dan Tehan said it will further strengthen the relationship between the two countries. He called the agreement very significant as it will make Australian exports to India cheaper and will create huge new opportunities for workers and businesses.

Through ECTA, India and Australia have tried to address several of the regulatory hurdles:

• Notably, the Indian liquor industry deals primarily in two categories - regular wines and premium wines. Currently, the effective duties on wines are 150%. As part of the deal, tariffs on wine with a minimum import price of $5 per bottle will be reduced from 150% to 100% on entry into force and subsequently to 50% over 10 years.

• Tariffs up to 30% on avocados, onions, broad, kidney and adzuki beans, cherries, shelled pistachios, macadamias, cashews in-shell, blueberries, raspberries, blackberries, and currants will be eliminated over seven years.

• Tariffs on pharmaceutical products and certain medical devices will be eliminated over five and seven years.
• Sheep meat tariffs of 30% will be eliminated on entry into force. 
• Wool will have the current 2.5% tariffs eliminated on entry into force.

Meanwhile, Union Minister of Commerce and Industry, Piyush Goyal said that the agreement is profitable for both countries with Australia's raw materials and India's quality finished goods.

"We're removing trade barriers which will lead to doubling of trade in the future that'll have great potential for labour-oriented sectors. This free trade is expected to take bilateral trade from the existing $27 billion to nearly $45-50 billion in the next 5 years," he said.

According to the agreement, tariffs will be eliminated on more than 85% of Australian exports to India (valued at more than $12.6 billion a year), rising to almost 91% (valued at $13.4 billion) over ten years. On the other hand, Australian households and businesses will also benefit, with 96% of Indian imports entering Australia duty-free on entry into force. "India is the world’s largest democracy and the world’s fastest-growing major economy, with GDP projected to grow at nine per cent in 2021-22 and 2022-23 and 7.1 per cent in 2023-24," noted the Australian trade minister.

"In 2020, India was Australia’s seventh-largest trading partner, with two-way trade valued at $24.3 billion, and sixth largest goods and services export market, valued at $16.9 billion. Our Government’s goal is to lift India into our top three export markets by 2035, and to make India the third-largest destination in Asia for outward Australian investment," added the Australian minister. 

Scott Morrison says ECTA will create enormous trade opportunities

Meanwhile, Australian Prime Minister Scott Morrison said the agreement would create enormous trade diversification opportunities for Australian producers and service providers bound for India, valued at up to $14.8 billion each year.

"This agreement opens a big door into the world’s fastest-growing major economy for Australian farmers, manufacturers, producers and so many more,” the Australian Prime Minister said.

"By unlocking the huge market of around 1.4 billion consumers in India, we are strengthening the economy and growing jobs right here at home," he added. 

(Image: ANI)