The Australia-India Economic Cooperation and Trade Agreement (ECTA), effective since December 29, 2022, marks a significant step in strengthening trade relations between the two nations. For Australian importers and exporters, this agreement presents numerous opportunities to expand and diversify their business activities.

Understanding ECTA: A Brief Overview

ECTA is a bilateral trade agreement aimed at reducing tariffs and enhancing market access between Australia and India. It serves as an interim arrangement, paving the way for a more comprehensive agreement in the future. The agreement focuses on eliminating trade barriers, fostering economic cooperation, and promoting mutual growth.

Key Benefits for Australian Exporters

1. Tariff Reductions and Eliminations

Under ECTA, over 85% of Australian goods exports to India by value became tariff-free immediately upon the agreement’s commencement. This figure is set to rise to 90% by January 1, 2026. Key sectors benefiting from these reductions include:

• Agriculture: Tariffs on products like sheep meat, wool, and certain horticultural goods have been significantly reduced or eliminated, enhancing competitiveness in the Indian market.
• Resources and Energy: Exports of coal, alumina, and metallic ores have seen tariff eliminations, supporting Australia’s mining sector.
• Wine and Other Beverages: Tariff reductions on wine exports provide Australian producers with improved access to India’s growing consumer base.

2. Enhanced Market Access for Services

ECTA includes provisions that facilitate the entry of Australian service providers into the Indian market. This encompasses sectors such as education, healthcare, and information technology, allowing for greater collaboration and investment opportunities.

Key Benefits for Australian Importers

Australian importers also stand to gain from ECTA through:

• Reduced Costs: Tariff eliminations on 96% of Indian imports into Australia, increasing to 100% by January 1, 2026, lower the cost of goods for Australian businesses and consumers.
• Diversified Supply Chains: Access to a broader range of Indian products, including textiles, pharmaceuticals, and machinery, supports supply chain diversification and resilience.

To maximise the benefits of ECTA, Australian businesses should first ensure they understand and comply with the agreement’s rules of origin, as this is essential to qualify for tariff concessions. Staying informed about the phased tariff reductions and other key provisions is also crucial for effective planning and decision-making. Additionally, businesses are encouraged to leverage support services offered by Austrade and the Department of Foreign Affairs and Trade, which provide valuable resources and guidance for entering and expanding within the Indian market.

More Opportunities To Be Aware Of

India wants to ensure that Australian businesses are aware of opportunities through India’s ‘Make in India’ program and the Smart Cities initiatives.

Prime Minister Modi launched the ‘Make in India’ program in 2014 – the aim being to promote Indian manufacturing for goods to be sold around the world (including in industries like construction, defense, electrical machinery, textiles, leather, mining, tourism and more). Complete foreign direct investment is now allowed in most of these industries (apart from defense, space and the news media). Modi said that Australia was a “natural partner” in such an initiative.

In October 2019, the Australia India Business Council launched a ‘Make in India Focus Group’ offering some advantages including potential government-to-business and project opportunities.

Similarly, Australian exporters should look closely for potential opportunities in India’s ‘Smart Cities’ project. India’s Government has highlighted infrastructure development as an integral policy objective due to the potential to boost economic growth. They’ve stated that that they’ll need to invest between US$1.2 and US$2 trillion in infrastructure development over the next few decades. The initiatives of this large-scale project will require investment in ‘smart energy’, ‘smart water’, ‘smart housing’, ‘smart waste management and more.

Further questions?

If you have further queries or concerns about how you can benefit from this Trade Agreement, please don’t hesitate to reach out to us.

Our import and export experts at International Cargo Express have decades of experience in international trade in challenging geopolitical climates. Feel free to ring us or request a quote.

or call us on 1300 227 461