Australian exporters to save $2 bn in tariffs due to trade pact with India

Exporters from Australia saved around $2 billion in tariffs by the end of December 2024 due to tariff concessions implemented under the Economic Cooperation and Trade Agreement (ECTA), or the interim trade deal, between the two countries, according to an official statement.

 

The ECTA came into force on December 29, 2022. Under the deal, by value, over 85 per cent of Australian goods exported to India are now tariff-free, which is going to rise to 90 per cent in 2026. As much as 96 per cent of imports from India are now tariff-free, and will rise to 100 per cent by 2026.

 

“Our free trade agreement with India has saved Australian businesses hundreds of millions of dollars… the savings are having a direct impact for Australians, reducing costs at the checkout and creating local jobs. Australia continues to make progress in its negotiations with India on a new free trade agreement, which will unlock even more trade opportunities for Australian businesses,” the Australian government said in a statement as it launched “A New Road Map for Australia’s Economic Engagement with India” on Wednesday.

 

Going ahead, sectors such as clean energy, education and skills, agribusiness, and tourism will drive the economic relationship between both the countries.

 

During the first year of the trade deal, Australian exports to India grew by 35 per cent, excluding coal. Particularly, the agreement kickstarted a whole range of Australian agricultural exports to India, including cotton, nuts, and some fruits and vegetables.

 

“This agreement does more than just boost trade, it helps our industries take advantage of the complementary nature of our trade relationship, while giving Australian exporters greater certainty and priming them for further growth,” said a report on the road map.

 

For instance, almost 200 Australian products were exported to India for the first time, or reintroduced after a long absence. These products included avocados, fresh salmon, pinewood, rock lobsters, a range of chemicals and pharmaceuticals, electric motors and generators, astroturf, and fibreglass.

 

Similarly, Indian businesses are also taking advantage of improved access to the Australian market, providing cheaper prices on goods for Australian consumers. In 2023, Australian imports of Indian agricultural products grew 15 per cent.

 

“There has been notable growth in imports of Indian industrial products, including clothing and apparel, medicaments, telephone sets, cosmetics and perfumes, machinery and auto parts. By 2026, all Indian products entering Australia will be tariff-free. Cheaper Indian inputs to Australian processed or manufactured goods lead to cheaper prices for Australian consumers,” the statement said.