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India-Australia Economic Cooperation and Trade Agreement (ECTA) approved

GS Paper 2

Syllabus: International Relations


Source: Indian Express

 Direction: The agreement is significant since it is 1st such agreement for India with a developed country in the past 10 years. The articles are taken from IE Editorial.


Context: Australian Parliament ratified India-Australia Economic Cooperation and Trade Agreement (ECTA) in a landmark moment for India.


Why the deal is a landmark?

  • It is 1st such agreement for India with a developed country: India has free trade deals mostly with South Asian countries and hardly served India’s trade interests.
  • Shows India’s negotiating skills
  • The deal has the potential to raise bilateral trade between India and Australia to nearly $50 bn in the next five years and create at least 10 lakh jobs in the start-up economy.
  • Provide a model for future FTA with other developed countries.


Key features of the deal:

  • Duty-free access to the Australian market for over 6000 broad sectors e.g., labour-intensive exports in textiles, leather, furniture, jewellery etc.
    • More importantly for India, sensitive sectors such as Dairy and Agriculture have been excluded.
  • Reduce the import prices for a number of commodities for India: duty-free import of Indian wines, and Australian coal at competitive rates.
  • Includes service sector (important for India labour) such as IT, Health, ITES etc.
  • Covers India’s concerns on Rules of Origin (RoO), Sanitary and Phytosanitary (SPS) measures, movement of persons etc.
    • g., the ‘Melt and Pour’ provision for the steel industry: It only allows Steel that is produced locally in Australia can be imported into India
  • Movement of Trained Professional: The deal provides for an annual quota of 1,800 for yoga teachers and Indian chefs and a commitment to over one lakh of India’s outgoing students to Australia for post-study work visas.
  • Resolves DTAA: The trade deal also resolves the long-pending Double Taxation Avoidance Agreement (DTAA) related to IT/ITES.


India-Australia Trade Relations:

  • Trade: Currently India’s trade with Australia is around $25 bn
  • India’s exports to Australia: Manufactured goods such as petroleum, medicaments, diamonds, jewellery, railway coaches and vehicles, milled rice and herbicides
  • India’s imports: Eighty-two per cent of its imports from Australia are coal, gold, copper ore, aluminium oxide, liquified natural gas, manganese ore, aluminium waste, pigments, lentils, etc.



India Australia: Basics

Transparency in FTA


Insta Curious

The commonality between India and Australia: India and Australia both are Commonwealth countries and parliamentary democracies with similar legal systems. Besides, India and Australia also are members of the Quad, a trilateral Supply Chain Resilience Initiative (SCRI) and the Indo-Pacific Economic Framework (IPEF).


Insta Mains

Q. Australia’s interests do not just align with India’s; they are inextricably entwined. Discuss. (150 words)

Insta Prelims

The term ‘Digital Single Market Strategy’ seen in the news refers to (UPSC 2017)



(c) EU

(d) G20

Ans: C

Digital Single Market is a market characterized by ensuring the free movement of people, services and capital and allowing individuals and businesses to seamlessly access and engage in online activities irrespective of their nationality or place of residence.


‘Broad-based Trade and Investment Agreement (BTIA)’ is sometimes seen in the news in the context of negotiations held between India and (UPSC 2017)

(a) European Union

(b) Gulf Cooperation Council

(c) Organization for Economic Cooperation and Development

(d) Shanghai Cooperation Organization

Ans: A

In June 2007, India and the EU began negotiations on a broad-based Bilateral Trade and Investment Agreement (BTIA) in Brussels, Belgium. It is still to come into effect.