India Australia’s trade in goods, services to double trade to $ 50 billion in five years

New Delhi: The India-Australia Economic Cooperation and Trade Agreement (ECTA) was signed on 2^nd  April 2022 by India’s Minister of Commerce and Industry, Consumer Affairs and Food, and Public Distribution and Textiles of India Mr Piyush Goyal and Australia’s Minister for Trade, Tourism and Investment Mr Dan Tehan.

The ECTA is an interim arrangement and parties will begin negotiations on a full-fledged free trade agreement in the next 75 days.

Apart from regular chapters like Trade in Goods and Services, Technical Barriers to Trade, Sanitary and Phytosanitary measures, Temporary Movement of Natural Persons, etc., this time the parties vide certain “side letters” have made broad commitments on wine, organic goods, work, and holiday visa, post-study work visas, etc.

It is expected that the ECTA would help in promoting bilateral trade between the two countries and would increase the trade exchange from USD 27.5 billion at present to USD 45-50 billion in comping 5 years.

Hon’ble Commerce Minister Shri Piyush Goyal led one of the largest trade delegation to Australia shortly after signing the India-Australia Economic Cooperation and Trade Agreement (ECTA). The trade delegation comprised of industry representatives from most of the Export Promotion Councils, Chambers of Commerce and senior govt officials. The delegation interacted with respective stakeholders in Australia led by Mr Dan Tehan, Trade and Investment Minister of Australia. The delegation had back-to-back meetings in Melbourne, Sydney and Perth. The delegation reached Melbourne on 5^th April 2022 and conclude the business interactions on 8^th April 2022.

Mr Piyush Goyal and his Australian counterpart Mr Dan Tehan addressed the business communities of both the countries. They highlighted the importance of the ECTA and emphatically rechristened the agreement as “Unity” the Hindi analogy of the abbreviations ECTA (pronounced as EKTA). Both the Ministers shared the long road they traversed to arrive at one of the most critical trade agreements more so in view of the present global geo-political and trade scenario. For India, the ECTA with Australia is the first agreement with a large developed economy of the world after more than a decade. Australia is also the third OECD country after Japan and South Korea with which India has signed a Free Trade Agreement (FTA).

While addressing the business community in Australia, Mr Goyal highlighted that ECTA offers immense scope for trade in services. He urged the Indian services exporters to make an out reach to Australia as ECTA has laid out a perfect pitch for both the sides for a mutually beneficial business opportunity.

Currently, India is Australia’s 9th largest trading partner and Australia is the 17th largest trading partner for India. Australia’s services exports to India were 5.2 billion USD and India’s services exports to Australia stood at 1.9 billion USD making more than 3 billion USD of trade surplus for Australia. India’s top services exports to Australia are; 

·      Telecommunications, computer, and information services: India’s exports to Australia in the sector has grown at CAGR of 16 percent in last ten years registering 38 percent annual growth in 2019 and 19 percent in 2020.

·      Travel services: Australia was the 4^th largest source of tourists in India in 2019 with around 3.7 lakh Australians travelled to India. 

·      Other business services (which includes research and development services, professional and management consulting services and technical, trade-related and other business services): India’s exports to Australia in the sector has grown at CAGR of 15 percent in last ten years despite registering negative growth in 2019 and 2020.

Australia’s main services exports to India is in the sector of Travel services, which has almost doubled during the last decade crossing 5 billion USD in 2019. There are more than 1 lakh Indian students enrolled in various courses in Australia. Australia has nearly 423,500 job vacancies as per government sources and India has abundance of skilled and non-skilled professionals.

A separate chapter has been introduced to facilitate the temporary movement of representatives of parties who are engaged in trade in goods, the supply of services, or the conduct of investment.Both the parties permit temporary movement for businessmen, installers and servicers, independent professionals, etc.Australia in its commitments has allowed temporary entry and stay to around 1800 professional Indian traditional chefs and yoga instructors under the category of Contractual Service Suppliers.Further, the following industries have been given specific emphasis under this head-

• to allow financial institutes of other party in their territory. The parties might have taken this initiative to promote trade between both parties in local currencies.
• to provide access to public telecommunication, network, or services to service providers, which will include providing reasonable roaming rates.
• to encourage recognition of professional qualifications and experience, registration, and licensing of professionals, including through mutual recognition to facilitate trade in professional services.
• decided that any decision or requirement under the foreign investment framework of each party shall not be subjected to dispute settlement.

The ECTA envisages the creation of various dedicated bodies to promote specific areas of engagement. For instance,

• Establishing a Joint Committee that will assess, review and monitor the implementation of the ETCA.
• A Subcommittee on Trade in Goods will be set up to promote trade in both agricultural and non-agricultural goods and to address non-tariff barriers.
• A Subcommittee on Trade in Services will be set up to facilitate trade in services between the parties.
• A Joint Technical Subcommittee on Rules of Origin and Customs Procedures and Trade Facilitation will be set up to oversee any issues arising with respect to Rules of Origin or Customs Procedures and Trade Facilitation
• A Working Group on the Temporary Movement of Natural Persons will be established to monitor and facilitate the temporary entry of each Party’s respective
• Professional Services Working Group is to be established for effective implementation and administration of systems for the recognition of qualifications, licensing, and registration procedures across professional services and services in regulated or licensed occupations.

Mr Sunil Talati, Chairman, Mr Karan Rathore, Vice Chairman and Dr Abhay Sinha, Director General represented the services sector and participated in the high level business delegation led by Hon’ble CIM.  Being a set up by Ministry of Commerce and Industry, SEPC will be the nodal organisation for creating and promoting business opportunities for India’s services sector in Australia in the given framework of ECTA. SEPC will be organising series of activities and outreach programme on ECTA followed by sector specific business delegations to Australia. Chairman, Vice Chairman and DG have urged businesses in Australia to look towards India for services import. In every meeting they created awareness about SEPC.