ECTA spurs farm trade

Australia is India’s 10th largest trading partner with a total trade of $18,902.62 million, per DGCIS data of April-November.

Similarly, India is Australia’s seventh largest trading partner and the most significant part is that both economies are highly complementary and would benefit greatly as the ECTA opens new opportunities for trade diversification for businesses.

The Australia-India Economic Cooperation and Trade Agreement (ECTA) is a stepping stone and has opened up new markets for exporters and service suppliers in many sectors.

ECTA will boost India’s trade with the support of developed nations by harnessing optimal benefits through technical upgradation of Indian industry and strengthening bilateral cooperation.

Under this agreement, India is being provided 100 per cent tariff elimination by an importing country in two phases — zero duty immediately on 98.3 per cent of tariff lines amounting to 96.4 per cent of value of our exports and phasing out to zero duty on the remaining 113 tariff lines constituting 1.7 per cent of tariff lines and amounting to 3.6 per cent of India’s exports (in value terms) in five years, which will benefit the remaining products.

For Australian products, India is offering concessions mostly on raw materials and intermediates either in the form of tariff elimination, tariff reduction (TR) with or without a tariff-rate quota (TRQ). Only a few agricultural products such as oranges, mandarins, almonds, pears and cotton among others have been allowed with limited quotas.

India has provided zero duty access immediately on 40.3 per cent of its tariff lines and the remaining 30 per cent in phased manner over a period of 3, 5, 7 and 10 years. This also includes 125 tariff lines where there will be duty reduction and not elimination.

Sensitive products

India has excluded many sensitive products without offering any concession. These include milk and other dairy products, chickpea, walnuts, pistachio nuts, wheat, rice, bajra, apple, sunflowers seed oil, sugar, oil cake, gold, silver, platinum, jewellery, iron ore and most medical devices. A Mutual Recognition Agreement on organic equivalence will be signed between the countries within 12 months of agreement for trade of organic products.

In the ECTA, reduction of 150 per cent tariff over nine years for wine bottles over import prices of$5 and $15 by 25 per cent and 75 per cent based on Indian WPI for wine will be to Australia’s advantage, the world’s sixth-largest producer and the fourth-largest exporter of wines.

In the processed food sector also there is elimination of tariffs up to 50 per cent for a wide range of food products, including infant formula, certain chocolates, breakfast cereals, pasta, olive oil, protein concentrates, prepared nuts, coffees and teas. There is a 30 per cent elimination of tariff in sheep meat for Australia and currently India imports sheep meat from New Zealand.

The pact does not allow such goods through stringent rules of origin that reflect the requirement for substantial processing. Based on India’s insistence, a number of agricultural goods have the wholly obtained criteria. Moreover, wherever other rules have been used, they largely include both change in tariff classification at the level of Subheading and a minimum of 35 per cent using Build-up Formula (or 45 per cent using Build-down Formula) value addition taking the Free on Board (FOB) value of exports as the base.

India exports basmati rice, spices, miscellaneous processed items, processed fruits and juices, cereal preparations, coffee, tea, marine products, guargum, sesame seeds, non-basmati rice, etc. Overall exports to Australia grew 104.83 per cent in 2021, and agriculture exports were up 14.43 per cent in dollar terms during April-November 2023. India-Australia ECTA will spur trade between the countries.

The writer is Chairman, APEDA

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