India and Australia started a free trade agreement starting from the Adani Ennore Container Terminal over Chennai, which resulted in providing greater access to each other’s markets. The Economic Cooperation and Trade Agreement (ECTA) will cover 90 percent of bilateral trade and provide all access to products from Australia. The trade between India and Australia was valued at $27.5 billion in 2021, making Australia India’s 17th largest trading partner and India Australia’s ninth largest trading partner.
India has increased its exports over the years and will gain preferential access to untapped areas of the Australian market. Indian textiles and garments will gain immense opportunities to grow the Indian handloom sector. The market in Tamil Nadu will gain a larger share of the market in Australia, which will provide gems and jewellery, leather and non-leather footwear, handicrafts, automobile parts, and engineering products. In 2022, Tamil Nadu exported products worth $384 million to Australia, and in FY 2023, such exports are already at $322 million.
The trade agreement is to help Indian exporters take advantage of opportunities in the Australian market and showcase India’s strengths in pharmaceuticals, jewellery, vehicles, agricultural products, textiles and garments, handlooms, leather, organic chemicals, engineering, and construction materials. It is hoping to gain a greater share of the Australian import basket. The Ennore terminal will be used as a dedicated export cargo terminal to Australia from the southern part of India.
India will benefit from preferential market access provided by the trade agreement, which includes labour-intensive markets and covers all tariff lines dealt by India and Australia. India will offer the Australian market over 70% off on its tariff lines, including lines of export interest to Australia that are primarily raw materials and intermediaries such as coal, mineral ores, and wines.
Trade services in Australia have ordered wide-ranging commitments in around 135 subsectors and Most Favoured Nation (MFN) status in 120 subsectors covering key areas of interest to India. Both sides have agreed to a separate annex on pharmaceutical products that enables fast-track approval for patented, generic, and biosimilar medicines.