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  • Sep 09, 2023
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India- Australia Relations.

Relevance:

  • GS Paper- 2: International Relations
  • Tags: #upsc #currentaffairs #competitiveexams #economiccorporation #india-australia.

Why in the news?

  • The signing of the India-Australia Economic Cooperation and Trade Agreement in 2022 represents a milestone in the comprehensive strategic partnership between the two major global economies, India and Australia.
  • India-Australia Strategic Relationship: Australia and India upgraded their bilateral relationship from ‘Strategic Partnership’ in 2009 to Comprehensive Strategic Partnership (CSP) in 2020 and Economic Cooperation and Trade Agreement (ECTA) in 2023.
  • The historical ties between India and Australia started immediately following European settlement in Australia from 1788. India and Australia established diplomatic relations in the pre-Independence period, with the establishment of India Trade Office in Sydney in 1941.

The salient features of India-Australia ECTA are as follows

  • The bilateral agreement encompasess economic and commercial relations between the two friendly countries, and covers areas like Trade in Goods, Rules of Origin, Trade in Services, Technical Barriers to Trade (TBT), Sanitary and Phytosanitary (SPS) measures, Dispute Settlement, Movement of Natural Persons, Telecom, Customs Procedures, Pharmaceutical products, and Cooperation in other Areas.
  • Eight subject specific side letters covering various aspects of bilateral economic cooperation were also concluded as part of the Agreement.

Impact or benefits

  • ECTA provides for an institutional mechanism to encourage and improve trade between the two countries.
    The ECTA between India and Australia covers almost all the tariff lines dealt in by India and Australia respectively.
  • India will benefit from preferential market access provided by Australia on 100% of its tariff lines.
  • This includes all the labor-intensive sectors of export interest to India such as Gems and Jewellery, Textiles, leather, footwear, furniture, food, and agricultural products, engineering products, medical devices, and Automobiles.
  • On the other hand, India will be offering preferential access to Australia on over 70% of its tariff lines, including lines of export interest to Australia which are primarily raw materials and intermediaries such as coal, mineral ores and wines etc.
  • As regards trade in services, Australia has offered wide ranging commitments in around 135 sub sectors and Most Favored Nation (MFN) in 120 sub sectors which cover key areas of India’s interest like IT, ITES, Business services, Health, Education, and Audio visual.

Some of the key offers from Australia in the services space include

  • Quota for chefs and yoga teachers; Post study work visa of 2-4 years for Indian students on reciprocal basis; mutual recognition of Professional Services and Other licensed/regulated Occupations; and Work & Holiday visa arrangement for young professionals.
  • On the other hand, India has offered market access to Australia in around 103 sub-sectors and Most Favoured Nation in 31 sub-sectors from the 11 broad service sectors such as ‘business services’, ‘communication services’, ‘construction and related engineering services’, and so on.
  • Both sides have also agreed to a separate Annex on Pharmaceutical products under this agreement, which will enable fast track approval for patented, generic and biosimilar medicines.

India -Australia Relations at brief

Dimension Example
Economic ●      Bilateral trade (in 2022): over $31 billion (India’s exports: over $10 billion and imports at $17 billion)

●      Target: Both countries aim to boost bilateral trade to $100 billion by 2030

●      Agreement: Implementation of the Economic Cooperation and Trade Agreement (ECTA) (2022) and early completion of the Comprehensive Economic Cooperation Agreement (CECA)

●      ECTA slashed away duties on 96% of Indian exports and 85% of Australian exports.
Defence and security cooperation ●      Regular military exercises: “Malabar” exercises in August 2023 (India, Australia, Japan, and the US), India has been invited to join the Talisman Sabre exercises in 2023

●      Mutual Logistics Support Agreement (MLSA) (signed between both countries in 2022) to enhance military interoperability

●      The 2+2 Ministerial Dialogue (2022)

●      Membership: Both are members of the Quad, Commonwealth, Indian Ocean Rim Association (IORA), and have participated in the East Asia Summits.

●      Indo-Pacific collaborations: Both Australia and India support a rules-based international order against China
Education and research collaboration ●      Letter of Intent on Migration and Mobility Partnership Arrangement to foster the exchange of skills.

●      Mutual Recognition of Educational Qualifications (MREQ) (2023)

●      Deakin University and the University of Wollongong are planning to open foreign university campuses in India.

●      Australia-India Strategic Research Fund (AISRF)
People-to-people ties ●      Indian Diaspora in Australia: Over 10 lakh people in Australia reported their ancestry as Indian origin.

●      Cultural exchanges: Annual Confluence Festival of India in Australia and the Oz Fest in India.
Shared Values ●      Pluralistic, Westminster-style democracies

●      Commonwealth traditions

●      Strong, vibrant, secular, and multicultural democracies

●      Free press

●      An independent judicial system

●      English language
Climate change and energy ●      Australia signed a Uranium supply deal with India (2014)

●      Letter of Intent on New and Renewable Energy for cooperation to reduce the cost of renewable energy technologies (signed in 2022)

●      India has given 10 million Australian dollars to Pacific Island Countries under the International Solar Alliance (ISA).

●      India-Australia Critical Minerals Investment Partnership
Strategic Indo-Pacific partnership ●      Shared vision: Free, open, and inclusive Indo-Pacific region, based on respect for sovereignty, territorial integrity, and international law.

●      Multi-lateral engagements: G20, India-Pacific Infrastructure Partnership (IPIP), the Indo-Pacific Economic Framework (IPEF) and the World Trade Organization (WTO).

●      Supply Chain Resilience Initiative (SCRI) (between India, Australia and Japan)
Science and Technology Cooperation ●      MoU between ISRO and Australian Space Agency (ASA) (2020) for space cooperation.

 

Way Forward

  • Growing India-Australia economic and commercial relations contribute to the stability and strength of a rapidly diversifying and deepening bilateral relationship between the two countries.
  • India and Australia have been each other’s important trading partners. These excellent bilateral economic and commercial relations have continued to enhance and deepen over time.
  • Australia is the 17th largest trading partner of India and India is Australia’s 9th largest trading partner. India-Australia bilateral trade for both merchandise and services is valued at US$ 27.5 billion in 2021. India’s merchandise exports to Australia grew 135% between 2019 and 2021.
  • 90% of the Australian exports by value get zero duty access to the Indian market. The agreement also secures cheaper raw materials availability and faster approval for medicines as well.
  • India’s exports consist primarily of a broad-based basket largely of finished products and were US$ 6.9 billion in 2021. India’s merchandise imports from Australia were US$ 15.1 billion in 2021, consisting largely of raw materials, minerals and intermediate goods.
  • Furthermore, the ECTA is expected to significantly boost total bilateral trade,exceeding $40-50 billion by 2035.
  • India and Australia are partners in the trilateral Supply Chain Resilience Initiative (SCRI) arrangement along with Japan which seeks to enhance the resilience of supply chains in the Indo-Pacific Region.
  • Further, India and Australia are also members of the recently formed Quad, also comprising US, and Japan, to further enhance cooperation and develop partnership across several issues of common concerns.
  • The India-Australia ECTA will further cement the already deep, close and strategic relations between the two countries and will significantly enhance bilateral trade in goods and services, create new employment opportunities, raise living standards, and improve the general welfare of the peoples of the two countries.

 

Source: Indian Express