In a noteworthy development, India’s exports to Australia have witnessed a substantial 14% year-on-year increase, reaching $5.87 billion in the first eight months of the current financial year (April-November). This surge is attributed to a favorable trade agreement that came into effect exactly a year ago on December 29. The agreement has notably opened up new avenues for Indian exports, including gold jewelry, garments, and bodies for tractors.
On the flip side, India’s imports from Australia experienced a 19% decline during April-November 2023, amounting to $11.15 billion. This decrease is primarily linked to reduced demand for coal, coke, and briquettes in India. Granular data for April-October 2023 indicates a significant 37% drop in coal-related imports from Australia, underlining a broader trend of reduced coal demand in India.
While it’s too early for a comprehensive evaluation of the trade agreement’s impact, officials acknowledge that India has gained access to new export opportunities due to preferential tariffs. The India-Australia Economic Cooperation and Trade Agreement (ECTA), operationalized on December 29, 2022, is viewed positively by both sides, fostering mutual growth.
Rajesh Agrawal, Additional Secretary in the Department of Commerce, emphasized the reciprocal nature of the ECTA, stating that negotiations considered comparative advantages, providing preferences to each side. The agreement has facilitated early growth in exports from both countries in areas covered by preferential tariffs.
Tapan Mazumder, Additional Director General of Foreign Trade, highlighted the growth potential in various export items, including gold jewelry, non-galvanized pipes for oil and gas, and cotton garments. The phased reduction in tariff lines is seen as a strategic move, with expectations of 100% tariff-free access by January 1, 2026.
The ECTA, viewed as a stepping-stone towards a Comprehensive Economic Cooperation Agreement (CECA), has set the stage for a broader bilateral deal between India and Australia. The CECA, currently under discussion, aims to further enhance economic cooperation and trade relations.
