India-Australia Free Trade Agreement: The 10-year wait was worth it (Opinion Piece
Source : indusage.com.au
In this opinion piece, Australia-India expert Sheba Nandkeolyar unpacks what the freshly inked India-Australia Free Trade Agreement means for us all and shines a light on some happy details in the fine print. Sheba Nandkeolyar Founder & CEO MultiConnexions Group is also the National Chair of Australia India Business Council Women in Business Chapter, Immediate Past National Chair of AIBC, former Australia India Council (DFAT) Board Member and leading cross-cultural expert, and an Indian Diaspora business leader.
Modi called it a “watershed moment.”
Morrison called it “one of the biggest economic doors there is to open.”
In case you missed it, Australia and India have signed a major interim free-trade deal that is being widely hailed as a hugely significant step in diversifying Australia’s (and India’s) export markets and reducing our economic dependence on other markets.
Australia is the 17th largest trading partner of India and India is Australia’s 9th largest partner. Bilateral trade in goods and services stood at USD 27.5 billion in 2021.
Whichever way you look at it, a free trade agreement between Australia and India is, in a word, awesome!
But, breaking it down – what does it mean for Australia?
Australian producers stand to benefit – The deal will cut Indian tariffs on Australian exports such as sheep goods, coal, lobsters, and rare earths (although notably not sensitive products like dairy or chickpeas). It also includes a phased reduction of tariffs on wine and a host of other agricultural products including avocados, cherries, nuts, blueberries, almonds, oranges, mandarins, pears, and strawberries. Australia wants to get into India’s top three export markets by 2035 and when India gets (a very literal) taste of what Australia has to offer, I am sure we can hit that target.
The agreement will initially cut tariffs on 85 per cent of Australian exports, worth $12.6 billion a year and will expand over a decade, eventually cutting tariffs on around 91 per cent of exports, worth $13.4 billion.
Australian employers stand to benefit – With COVID putting a grinding halt on migration to Australia in recent years, many Australian employers who would normally look to fill skills shortages with foreign expertise have been finding it difficult to do so. Indeed, the AI-ECTA has arrived at a moment of significant talent shortages constraining Australian industries, including the accounting, and engineering fields among others. The new deal promises to benefit the professional services industry as the agreement will “facilitate the recognition of professional qualifications, licensing, and registration procedures between professional services bodies in both countries”, according to a government statement.
Australian consumers stand to benefit – Rising inflation in Australia has put pressure on consumers doing their regular grocery shopping. With reduced and eliminated tariffs on goods imported from India, Australian consumers stand to benefit when purchasing a range of products.
Opening doors for a market of over 1.4 billion people – India’s huge population and economic growth make it an attractive market for Australia.
What does it mean for India?
Indian producers stand to benefit – Indian exporters from over 6,000 broad sectors, including textiles, leather, furniture, jewellery, and machinery, will get duty free access in the Australian market immediately after the interim trade agreement between the two countries comes into force. India’s goods exports were worth USD 6.9 billion and imports aggregated to USD 15.1 billion in 2021. Major exports by India to Australia include petroleum products, textiles and apparels, engineering goods, leather, chemicals and gems and jewellery.
Labour-intensive sectors stand to benefit – Labour-intensive sectors which would gain immensely, include textiles and apparel, few agricultural and fish products, leather, footwear, furniture, sport goods, jewellery, machinery, electrical goods, railway wagons, selected pharmaceutical products and medical devices. Cheaper raw materials from Australia will make these industries more competitive.
Students and professionals stand to benefit – Post study work visas will provide extended options for working in Australia to eligible Indian graduates, postgraduates and STEM (science, technology, engineering and mathematics) specialists. This facilitates greater cooperation across the digital world, start-ups, and education. There are also liberalised visa norms for students and professionals, including quotas for Indian chefs and yoga teachers.
Creation of about a million jobs – This development is predicted to create significant employment in India.
So, in a nutshell, what does it mean for the everyday Australian?
- Shot in the arm for our economy
- Cheaper imported goods from India
- Boost to Australia’s STEM & IT workforces
- More employment opportunities
What does it mean for the everyday Indian?
- Opens the way for professionals and students aspiring to study and work in Australia
- Greater access to high quality and cheaper Australian goods
- More employment opportunities
- Improved market conditions
I think the ten-year wait was worth it, and I am excited about what the future holds for both India and Australia, as well as the relationship between the two countries.
