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Australia Signs New Trade Deal with India

The Australian Parliament has passed a new trade deal with India this week, which signals a green light for Australia to reduce its dependency on China. The two-way trade between Australia and India might have only been USD 27.5 bn last year, which is very little as compared to the USD 251 bn between Australia and China, but still, it is a huge opportunity for Australia.

At present, China is Australia’s largest trading partner, with a 33% share of its exports and a 27% share of its imports, compared to India’s 3.7% share of its exports and a 2.4% share of its imports.

It is, therefore, strategically important for the trade diversification of Australia away from China. There is a multiplicity of geo-political factors that significantly tilt the balance in favour of India, leading to a win-win partnership between the two countries.

72% of India’s exports to Australia consist of manufactured goods such as petroleum, medicaments, diamonds, jewelry, railway coaches and vehicles, milled rice, and herbicides. And 82% of the imports from Australia consist of coal, gold, copper ore, aluminum oxide, liquified natural gas, manganese ore, aluminum waste, pigments, lentils, etc. 

Under the new trade agreement, tariffs on a range of Australian exports to India will be eliminated. There will also be a phased reduction of tariffs on wine and agricultural products, including avocados, cherries, nuts, blueberries, almonds, oranges, mandarins, pears, and strawberries.

The deal will also benefit India’s labor-intensive sectors, including apparel and textiles, leather and footwear, gems and jewellery, furniture, machinery, electrical goods, and pharmaceuticals.

The ratification of the India-Australia Economic Cooperation and Trade Agreement (ECTA) by the Australian parliament on Tuesday demonstrated India’s skills in trade negotiations. But the ratification of the deal through the Australian parliament is far from a job finished. It is just the beginning.

The negotiations show that both countries are serious about reaching their economic potential, which will be enhanced after India completely takes over the G20 presidency next year.


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