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Learn more about the historic trade agreement here.
On 2 April 2022 Australia and India signed a historical free trade agreement.
This trade agreement is symbolic for two countries with domestic political agendas at a time where international trade relations are difficult and uncertain. This AI ECTA agreement is an important agreement for Australian importers because it will reduce 85% of tariffs on imported goods from India to Australia.
The AI ECTA will provide better trade relations for Australia export industries for Lithium (Used batteries for Indian Electric cars), lobster and wine.
Prime Minister Scott Morrison said the agreement would create enormous trade diversification opportunities for Australian producers and service providers bound for India, valued at up to $14.8 billion each year.
“This agreement opens a big door into the world’s fastest growing major economy for Australian farmers, manufacturers, producers and so many more,” the Prime Minister said.
“By unlocking the huge market of around 1.4 billion consumers in India, we are strengthening the economy and growing jobs right here at home.
“This is great news for lobster fishers in Tasmania, wine producers in South Australia, macadamia farmers in Queensland, critical minerals miners in Western Australia, lamb farmers from New South Wales, wool producers from Victoria and metallic ore producers from the Northern Territory.
“This agreement has been built on our strong security partnership and our joint efforts in the Quad, which has created the opportunity for our economic relationship to advance to a new level.”
The agreement will also reduce the visa requirements for Indian students and temporary visa holders at a time where the Australian hospitality and tourism industry is trying to recover from the effects of the Covid 19 pandemic. The agreement mentions the pharmaceutical, medical and technical service industries and part of the agreement is reducing the government red tape.
For importers currently sourcing goods from China, the trade disadvantages have been extreme. From productions delays from electricity black outs, high shipping costs and a Covid zero policy with continued lockdowns. Importers can really benefit from utilizing this new agreement.
It’s worth noting though that ocean freight costs from India to Australia are currently high and space remains tight due to limited shipping options. There is some concern that the current available capacity may not be able to service the increased demand the FTA will create – so it will be interesting to see which carriers will back a direct service connecting Oceania with India in the coming months.
With domestic laws still needed to be passed, we hope that the agreement will be in effect by the end of the year.
If you would like more information on the new agreement from DFAT please click here.
Or for more information on how Ligentia can help organisations with their import/export requirements for India and Australia, contact: Dean Neville.