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  • Writer's pictureHindol Sengupta

7 reasons why ECTA is a historic pact between Australia and India

Updated: Oct 17, 2022

The Australia-India Economic Cooperation and Trade Agreement (ECTA) has broken new grounds in many ways between two major democracies in the Indo-Pacific. Here are 7 key ways that it is pathbreaking.

Indian minister for trade and commerce Piyush Goyal shakes hands with his Australian counterpart Dan Tehan during the negotiations of the Australia-India Economic Cooperation and Trade Agreement (ECTA) earlier this year.

1. India’s first such successful trade deal in more than a decade after one with Japan in 2011.

2. It shows an intention among both parties to really push the relationship. In essence, in many of these deals, the key point when dealing with a country like India is access to its markets and offering it access, plus, this plus is critical, mobility, that is, movement of people. This deal does both effectively. For example, if Australian wines have better (lower tariff) access to India, Indian pharmaceutical products can now go to Australia at a better rates. Australia is also giving special visas to Indians not only in STEM sectors but also to Indian chefs and yoga instructors.

3. Australia has reserves of at least 21 of the 49 critical minerals identified by the Indian Government and can play an integral role in strengthening India’s supply chains. Australia has the potential to be one of the top suppliers of cobalt and zircon to India, being in the top 3 for global production of these minerals. Australia also has reserves to supply many other critical minerals to India, including antimony, lithium, rare earth elements and tantalum. For more details on the potential of Australia-India critical minerals trade, read here.

4. Australia has agreed to amend its taxation laws to prevent double taxation, a major problem faced by Indian information technology majors which can now expand their Australia operations considerably.

5. Such a deal is particularly critical to watch because India has refused to be part of two major China-led initiatives in multi-nation trade deal making, the Regional Comprehensive Economic Partnership (RCEP), and the Belt and Road Initiative. Therefore, it is through bilateral deals like ECTA that are likely to propel India's economic activities in the Indo-Pacific.

6. The ECTA deal not only boosts economic relations significantly (bilateral trade will likely rise from around $27 billion to $45-50 billion in the next five years), it also creates a deeper, more resilient bedrock for strategic ties between the two countries.

7. The ECTA deal has created a model for cooperation with India which is likely to use this framework for other bilateral negotiations. In a sense, ECTA has become the benchmark in such trade negotiations with India.


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