Three Years of India Australia Economic Cooperation and Trade Agreement

Background of the Agreement

Three Years of India Australia Economic Cooperation and Trade Agreement: The India Australia Economic Cooperation and Trade Agreement (ECTA) was signed in 2022, marking a major shift in India’s trade diplomacy. It aimed to double bilateral trade within five years, reflecting mutual economic trust.

This agreement became operational at a time when India was recalibrating its global trade strategy. Notably, it was India’s first trade agreement with a developed country in over a decade, after a long pause in such engagements.

Static GK fact: Australia is classified as a developed economy with strong commodity and services sectors, making it a strategic trade partner for India.

Trade in Goods and Market Access

Under ECTA, Australia offered 100% duty-free access for Indian exports. This covered key sectors such as textiles, leather, jewellery, engineering goods, and pharmaceuticals.

For India, this opened a large, high-income consumer market. It also strengthened India’s manufacturing and export competitiveness in value-added goods.

Indian imports from Australia focused on coal, gold, and raw materials, supporting India’s energy and industrial needs. These imports are crucial for sustaining India’s infrastructure growth.

Static GK Tip: Coal remains India’s dominant energy source, accounting for over half of electricity generation.

Trade in Services and Professional Mobility

A major highlight of ECTA was the emphasis on services trade and skilled mobility. Indian students gained access to extended post-study work visas ranging from two to four years.

The agreement also introduced quotas under the Work and Holiday visa programme, improving short-term employment opportunities for young Indian professionals. These measures strengthened people-to-people ties alongside economic integration.

Additionally, the agreement eliminated double taxation on Indian IT offshore income, reducing compliance burdens for Indian service firms.

Regulatory Cooperation and Safeguards

ECTA incorporated robust Rules of Origin to prevent third-country goods from being routed unfairly through Australia. This ensured genuine trade benefits for both economies.

The agreement also included fast-track pharmaceutical approvals, allowing Indian generic medicines quicker access to the Australian market. Regulatory cooperation improved trust between standards agencies of both countries.

Static GK fact: Rules of Origin are a core feature of all Free Trade Agreements to prevent trade deflection.

Current Trade Status and Economic Outcomes

By FY25, India became Australia’s 8th largest trading partner, while Australia ranked as India’s 14th largest partner. Total bilateral trade reached US$ 24.1 billion, reflecting steady growth since ECTA’s implementation.

India’s key exports included petroleum products, engineering goods, and pharmaceuticals, while Australia supplied critical raw materials essential for India’s economy.

Strategic and Geopolitical Significance

Beyond economics, ECTA reinforced Indo-Pacific convergence between the two nations. India and Australia cooperate closely under regional maritime and strategic initiatives.

Both countries are part of the Quadrilateral Security Dialogue, alongside the US and Japan, aligning economic cooperation with security interests. Defence ties are strengthened through agreements like Mutual Logistics Support Agreement and exercises such as Malabar and AUSINDEX.

Australia’s role as a supplier of critical minerals like lithium and cobalt supports India’s electric vehicle and clean energy transition. This directly links trade cooperation with India’s long-term sustainability goals.

Static GK Tip: Lithium and cobalt are essential inputs for lithium-ion batteries used in electric vehicles.

Static Usthadian Current Affairs Table

Three Years of India Australia Economic Cooperation and Trade Agreement: