India has achieved the unique distinction of operationalizing two Trade Agreements this year. After the entry into force of India UAE Comprehensive Economic Partnership Agreement on May 01 earlier this year, the India-Australia Economic Cooperation and Trade Agreement (IndAusECTA) has come into effect from December 29, 2022.
The ECTA was signed on April 2, 2022, ratified on November 21, written notifications were exchanged on November 29 and after 30 days, the agreement has come into force on December 29, 2022.
The union commerce and industry minister Piyush Goyal while addressing industry representatives and the media in Mumbai on December 29, 2022 has said that the agreement has been “negotiated with the speed of Bret Lee and the perfection of Sachin Tendulkar”.
The Ind-Aus ECTA provides an institutional mechanism to encourage and improve trade between the two countries and it covers almost all the tariff lines dealt by India and Australia.
India will benefit from preferential market access provided by Australia on 100% 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 be offering preferential access to Australia on over 70% of its tariff lines, including lines of export interest to Australia, which are primarily raw materials and intermediaries such as coal, mineral ores and wines.
As regards to trade in services, Australia has offered wide-ranging commitments in around 135 sub-sectors and Most Favoured Nation (MFN) status in 120 sub-sectors covering key areas of interest to India.
On the other hand, India has offered market access to Australia in around 103 sub-sectors and Most Favoured Nation status in 31 sub-sectors from the 11 broad service sectors such as ‘business services’, ‘communication services’, ‘construction and related engineering services’, and so on.
Both sides have also agreed to a separate Annex on Pharmaceutical products under this agreement, which will enable fast-track approval for patented, generic and bio similar medicines.
It is estimated that an additional 10 lakh jobs would be 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 the ECTA. The agreement is also likely to increase investment opportunities, promote exports, create significant additional employment and facilitate strong bonding between the two countries.
Australia is an important strategic partner of India. They are also part of the four nation QUAD, Trilateral Supply Chain Initiative and the Indo-Pacific Economic Forum (IPEF).
All the necessary notifications required for entry into force of Ind-Aus ECTA on 29.12.2022 have been issued by Department of Revenue and the Directorate General of Foreign Trade in the Department of Commerce. A few shipments have been given preferential access certificates by the union Commerce and Industry Minister Piyush Goyal, in Mumbai on December 29, 2022.
Also the historic India-UAE Comprehensive Economic Partnership Agreement (CEPA) which was signed between the two nations on 18 February 2022, officially entered into force on May 01, 2022. Secretary, Department of Commerce, BVR Subrahmanyam flagged off the first consignment of goods comprising of Jewellery products from India to UAE under the India-UAE CEPA at a function in New Customs House in New Delhi on the same date.
Gems & Jewellery sector contributes a substantial portion of India’s exports to the UAE and is a sector that is expected to benefit significantly from the tariff concessions obtained for Indian products under the India-UAE CEPA.
Overall, India will benefit from preferential market access provided by the UAE on over 97 % of its tariff lines which account for 99% of Indian exports to the UAE in value terms particularly from labour-intensive sectors such as Gems and Jewellery, Textiles, leather, footwear, sports goods, plastics, furniture, agricultural and wood products, engineering products, pharmaceuticals, medical devices, and Automobiles. As regards trade in services, Indian service providers will have enhanced access to around 111 sub-sectors from the 11 broad service sectors.
CEPA is expected to increase the total value of bilateral trade in goods to over US$100 billion and trade in services to over US$ 15 billion within five years.
The immense potential for strategic partnership between the two nations by this agreement is a trendsetter because of the short time in which it was negotiated.
“Although the agreement had envisioned a target of USD 100 billion worth of trade, given the size of India’s market and the access that UAE would give to India, much more could be achieved,” has said and added that noting that the agreement was an outcome of the vision of the leaders of the two nations, and for India, UAE would be a gateway to the world.
The commerce secretary informed that India was negotiating trade agreements at a very fast pace with complementary economies and that talks were ongoing with UK, Canada and EU. Stating that USD 670 bn of exports (goods and service) during last fiscal year constituted 22-23% of the GDP, exports are an important engine of growth in every economy he said and added that the world was looking to India as a reliable partner.
(The author is a regular columnist.)
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