JOIN USIndia-Australia FTA comes into force; Piyush Goyal eyes more agreements in 2023
The India-Australia Economic Cooperation and Trade Agreement signed in April this year came into force on Thursday. Union Commerce Minister Piyush Goyal said he expected at least two more free trade agreements to be signed in 2023.
At an event in Mumbai, Goyal said negotiations are scheduled with the UK, European Union and Canada. Goyal said the FTA with Australia would benefit a slew of sectors, including textiles, gems and jewellery and information technology, which gets aided by the dropping of double taxation. He expected Indian IT companies' billing to Australia alone to grow to $1 billion in the next 5-7 years from $200 million.
"There is a lot of potential for exporting finished goods to Australia since they hardly manufacture anything. They are largely a raw material and intermediate producing country," Goyal said. The India-Australia FTA is the second such in 2022 to come into force after the India-UAE Comprehensive Economic Partnership Agreement operationalised on May 1.
The government estimates an additional 10 lakh jobs to get created in India under ECTA. "Indian Yoga teachers and chefs are set to gain with the annual visa quota. Over 1 lakh Indian students would benefit from post-study work visa (for 18 months to 4 years) under ECTA," the PIB said.
The government said India will benefit from preferential market access provided by Australia on 100 per cent of its tariff lines, including all the labour-intensive sectors of export interest to India, such as gems and jewellery, textiles, leather, footwear, furniture, food, and agricultural products, engineering products, medical devices and automobiles. On the other hand, India will offer preferential access to Australia on over 70 per cent of its tariff lines, including lines of export interest to Australia, primarily raw materials and intermediaries such as coal, mineral ores and wines.
Goyal defended India walking out of the RCEP. As of now, with the agreement with Australia, India has separately struck trade agreements with 13 of the 15 countries in the RCEP, while only New Zealand and China remain.
Goyal said the ministry expected the bilateral trade between India and Australia to increase to US$ 31 billion in five years with the FTA in place, adding that India will get access to cheaper raw materials like coal from Australia while the finished Indian goods will have a market there.
With the new government in Australia ratifying the agreement, 98 per cent of the Indian exports by value will enter the country sans any duties, Goyal said. Prime Minister Narendra Modi termed the pact a "watershed" moment, unlocking the enormous potential of trade and economic ties and boosting businesses on both sides.
The first jewellery consignment under the India-Australia Economic Cooperation and Trade Agreement (ECTA) was flagged off Thursday from Mumbai, Surat and Chennai, the Gem and Jewellery Export Promotion Council said. The pact will boost the bilateral gem and jewellery trade to double to $2.5 billion from the present value of $1.27 billion over the next three years, GJEPC chairman Vipul Shah said.
The Global Trade Research Initiative (GTRI), a think tank, said the trade of value US$ 23 billion would become duty-free from day one. The GTRI estimates suggest that the bilateral trade will cross $70 billion in the next five years due to buoyant trade relations and Australia's gradual weaning away from China," GTRI Co-founder Ajay Srivastava said in a statement.