Australia-India trade deal is a boost for both nations

The Australia-India relationship has never been stronger. On Saturday, our two countries took the relationship to an even higher level by signing a free trade agreement called the Australia-India Economic Co-operation and Trade Agreement.

The name of the agreement, ECTA, was suggested by India as it sounds like the Hindi word for unity and this represents the closeness of the deal and our relationship. The relationship is forged at the community level and runs right up to the highest levels of government.

It is underpinned by common values and a mutual interest in a stable and secure Indo-Pacific.

India is the world’s largest democracy. It is the world’s fastest growing major economy. It is also a young, educated and mobile country, with one million Indians turning 18 every month.

This unity agreement will create new jobs and opportunities for people in both countries.

Under the agreement, tariffs will be eliminated on more than 85 per cent of Australian goods exports to India (valued at more than $12.6bn a year), rising to almost 91 per cent (valued at $13.4bn) across 10 years. Australian households and businesses will also benefit, with 96 per cent of Indian goods imports entering Australia duty-free.

Tariffs will be eliminated immediately on sheep meat; wool; coal; alumina; metallic ores, including manganese, copper and nickel; and critical minerals including titanium and zirconium.

Tariffs will be eliminated over time on avocados, onions, (broad, kidney and adzuki) beans, shelled pistachios, macadamias, cashews, blueberries, raspberries, cherries, blackberries and currants. Tariffs on wine, almonds, lentils, oranges, mandarins, pears, apricots and strawberries will be reduced.

In 2020, India was Australia’s seventh largest trading partner, with two-way trade valued at $24.3bn. It was our sixth largest goods and services export market, valued at $16.9bn.

Australian exports to India are expected to grow to around $45bn by 2035, lifting India into our top three export markets.

This agreement will also turbocharge our close, longstanding and highly complementary economic relationship in areas such as professional services, education and tourism.

Both countries will facilitate the recognition of professional qualifications, licensing and registration procedures between professional services bodies in both countries. Australian services suppliers in 31 sectors and subsectors will be guaranteed to receive the best treatment accorded by India to any future free trade agreement partner.

It will support access for a range of Australian and Indian skilled service providers, investors and business visitors – facilitating two-way investment and providing businesses in both countries with greater certainty.

In a boost to our STEM and IT workforces, the length of stay for an Indian student with a bachelor’s degree with first-class honours will be extended from two to three years post study in science, technology, engineering or mathematics and information and communications technology sectors.

India has agreed to lock in 49 per cent foreign equity for a range of Australian banking and insurance services in the AI-ECTA, higher than the foreign equity limit India provided in other significant free trade agreements with Japan, South Korea and Singapore.

Although it was negotiated as an interim agreement, the agreement is substantial and as such will be notified as a free trade agreement with the World Trade Organisation. Our unity agreement should also be viewed as part of the broader engagement between our two countries.

Our work together through the Quadrilateral Security Dialogue is a positive force for a free and open Indo-Pacific. Our investment in the relationship through the India Economic Strategy recognises the key growth sectors for both countries of critical minerals, space and energy underscored by improvements in economic policy and regulation to smooth the trade relationship. The recent package of initiatives announced by our government, worth more than $280m, was the single largest invest­ment in our bilateral relationship.

Delivering a free trade agreement can be time-consuming, exhausting and hard-fought, but the results are worth the effort. Negotiations between Australia and India began in 2011 but it was the joint encouragement from prime ministers Scott Morrison and Narendra Modi that gave the process the impetus to reach Saturday’s historic milestone.

Australians will benefit from this trade deal, and we will also benefit from a stronger India. International trade is not a zero-sum game.

Australia’s economic statecraft can be summed up using three Ps: principled, proactive and, where necessary, patient.

All three have been applied during the process to bring a free trade deal with India into existence. As we sign the ECTA, Australia and India are demonstrating an enhanced unity of purpose. It could not come at a better time.