The Economic Cooperation and Trade Agreement (ECTA) is the first FTA signed between India and a developed country in ten years. In April 2022 he was signed by Minister of Commerce and Industry Piyush Goyal and entered into force on 29 December.
The deal is expected to boost bilateral trade between India and Australia from $27.5 billion in 2021 to around $45-50 billion over the next five years.
“The Federal Government of India is already doing its job. The policy framework is already in place. The Modi government is pushing and will continue to do so. needs to be more involved to ensure numbers are achieved for both sides.
She said that among Indian states, Tamil Nadu and Uttar Pradesh are already leading efforts to use the FTA, and other states can take inspiration from them.
“When Minister Goyal was in Australia in April, he raised bilateral trade targets to the very ambitious level of $100 billion by 2030. “It takes a lot of work, not only from governments but also from businesses, we need to do it,” McKay said.
She believes free trade agreements have set a framework and a conducive environment for companies to do business. India’s exports to Australia in 2021 will be $10.5 billion and India’s imports from Australia will be her $17 billion, her $6.5 billion real deficit for India.
Australia is India’s 17th largest trading partner and India is Australia’s 9th largest trading partner.
India’s merchandise exports to Australia grew by 135% between 2019 and 2021 and consisted mainly of finished goods such as textiles and apparel, engineering products, leather, footwear, gems and jewellery, and sportswear. increase.
India’s commodity imports from Australia mainly consist of raw materials, minerals and intermediate goods. About three-quarters of India’s imports from Australia are coal, and 70% of the coal is coking coal.
Following the ECTA implementation, strong growth is expected in India’s labor-intensive sectors such as finished goods such as textiles and apparel, gems and jewellery, leather and footwear, furniture and engineering products, according to McKay. These items, as well as other countries with which Australia has his FTAs in Southeast Asia, he was subject to tariffs of 4-5% in pre-ECTA Australia.
FTAs will also help Indian entrepreneurs access cheaper raw materials such as minerals that are important to sectors such as steel, renewable energy, electric vehicle manufacturing, aluminum, textiles and garments, making these more competitive. With that said, McKay, who is an avid supporter of India in Australia, added: Former member of parliament. Her love of sarees is well known and she was the first woman to wear a sari to the Australian Parliament.
In addition to ECTA, Australia agreed to amend Australian domestic tax law to stop taxing the offshore income of Indian companies providing technology services to Australia. This will resolve a long pending request from India. According to industry estimates,
Indian IT companies could save more than $1 billion in taxes over the next few years as a result of the above amendments, making them more competitive.
