India-Aust CECA negotiations to begin from Jan 2023
The Confederation of Indian Industry (CII) believes that the India-Australia ECTA, which came into effect on 29 Dec 2022, will send a positive signal and sets the pace for free trade agreements (FTAs) with the UK, Canada and EU.
Welcoming the, CII pointed out that India was already negotiating FTAs with the UK, Canada and EU.
With ECTA as an interim trade deal, CII looks forward to negotiations for the bilateral Comprehensive Economic Cooperation Agreement (CECA) agreement which may be concluded by September 2023.
The Indian Government has been accelerating FTA negotiations with developed markets as part of its global strategy to boost exports.
The CII noted that the India-AusECTA has the potential to double bilateral trade in goods and services to US$45 billion in five years.
“Australia and India are increasingly working together as strategic and economic partners. India Australia ECTA is a ground-breaking agreement that will leverage the industry to capitalize the enormous untapped potential,” said Sanjay Budhia, Chairman – National committee on EXIM and Managing Director of Patton International Ltd.
“The agreement is expected to boost investments, enhance market access, create additional job opportunities, and most importantly strengthen the bilateral ties of two important players in Indo-Pacific region.”
The major boost for India would be in its labour-intensive sectors, which are currently subject to import duty of 4-5% by Australia, will gain immediate duty-free access, according to CII release on 28 Dec 2022.
Textiles and apparel, leather and footwear, furniture, sports goods, jewellery, machinery, railway wagons and select agricultural and marine products are expecting immediate gains from the ECTA.
CII noted that substantial gains are expected in pharmaceuticals whereby drugs approved in other developed jurisdiction will get approval in Australia much faster.
About 96% of Australia’s exports to India comprised of raw materials and intermediate products, thus the tariff concessions offered by India will allow local/domestic industries to get cheaper raw materials and enhance their competitiveness.
CII is also looking forward to various opportunities for trade in services. Australia has made wide ranging commitments in around 135 sub sectors with most-favoured nation (MFN) status in around 120 sub-sectors. The major gains are for the Indian IT sector followed by healthcare and education, and service professionals such as yoga teachers and chefs.
CII expects large Indian IT companies to increase their involvement in Australian government projects. The deal enables India and Australia to collaborate and develop niche skill sets, provide global digital solutions, and further develop fintech capabilities.
On the other hand, India is making commitments in around 103 Service sub-sectors with MFN in 31 sub-sectors.
Another important announcement made by Australian Parliament is the double tax avoidance agreement (DTAA) ratification, along with its trade deal with India. The DTAA may come into force on April 1, 2023.
The DTAA is expected to eventually lead up to US$1 billion in savings for Indian IT companies operating in Australia. Therefore, Indian IT companies may be able to generate roughly US$4-$8 billion business income from Australia each year.
The full-fledged CECA will formally begin negotiations from next month (Jan 2023), with many sensitive sectors including digital trade, government procurement, labour and environment, it said. fiinews.com
