Australia-India Economic Cooperation and Trade Agreement (ECTA) White Paper

The ECTA represents with an opportunity for both Australia and India to enhance their economic ties and foster mutual growth. By reducing trade barriers and facilitating smoother transactions, the agreement is set to benefit a wide range of industries and contribute to the economic prosperity of both nations.

13 December 2024

The Australia-India Economic Cooperation and Trade Agreement (ECTA), which entered into force on 29 December 2022, marks a significant milestone in the economic relationship between Australia and India. This agreement is poised to benefit Australian businesses and consumers by eliminating tariffs on a substantial portion of goods traded between the two nations.1

Key Benefits of ECTA

  • Tariff Elimination: Over 85% of Australian goods exports to India are now tariff-free, with this figure set to rise to 90% by 1 January 2026. Similarly, 96% of imports from India are now tariff-free, increasing to 100% by 1 January 2026.
  • Trade Facilitation: New rules under ECTA will provide Australian traders with greater certainty. This includes advance rulings on tariff treatment and streamlined documentation requirements for faster processing of goods.

Trade Trends

  • Australia's Exports to India: Australia's exports to India are primarily raw materials and intermediate goods, with coal being the dominant export. In 2021, Australia exported $31.5 billion worth of goods to India, with coal briquettes accounting for $27 billion of this total.
  • India's Exports to Australia: India's exports to Australia are more diversified and include finished products such as refined petroleum, packaged medicaments, and diamonds. In 2021, India exported $7.66 billion worth of goods to Australia.

Sector-Specific Benefits

Agriculture: High tariffs on agricultural products have been reduced, benefitting Australian farmers. For instance, tariffs on sheep meat and fresh rock lobster were eliminated immediately upon the agreement's entry into force.

Item and Export

Tarriff reduction

Sheep meat

Australia exported $4.3 billion of sheep meat to the world in 2021. Duties on Australian exports to India are 30 per cent

  • Immediate elimination of tariffs on 29 December 2022.

Seafood

Duties on Australian exports to India are 30 per cent.

  • Elimination of tariffs on fresh rock lobster on 29 December 2022
  • Phased elimination of tariffs on most other seafood, including Atlantic salmon, tuna and frozen rock lobster over 6 years.

Horticulture

Horticulture contributed $4.2 billion to Australia’s total agricultural export income in 2021.

  • Phased elimination of tariffs over 6 years on avocados, certain peas and beans, onions, leeks, asparagus, cherries, berries, macadamias, cashews in-shell, shelled pistachios and hazelnuts.
  • Reduction of tariffs over 6 years for apricots, garlic and strawberries.
  • Immediate 50% tariff reduction within an annual quota of 150,000 tonnes for lentils, of 34,000 tonnes for almonds, of 13,700 tonnes for oranges and mandarins, and of 3,700 tonnes for pears.

Wool

Australia exported $3.1 billion of wool globally in 2021 and India remains one of the key markets.

  • Immediate elimination of tariffs on 29 December 2022.

Barley and oats

Australia exported $2.7 billion of barley and $156 million of oats globally in 2021

  • Tariffs locked at 0 per cent as on 29 December 2022.

Wine

Total Australian wine exports to the world were valued at $2.1 billion in 2021.

  • 150% tariff cut to 100% on 22 December 2022 and phased to 50% over 9 years for bottles valued over US$5
  • 150% tariff cut to 75% on 29 December 2022 and phased to 25% over 9 years for bottles valued over US$15
  • Minimum import price will be indexed every 10 years based on Indian wholesale price index for wine.

India will extend any market access improvements to future FTA partners to Australia

Hides and skins

Australia exported $648 million of hides and skins globally in 2021.

  • Tariffs locked at 0 per cent on 29 December 2022 for raw and processed hides and skins.

Cotton

Australia exported $1.9 billion of cotton globally in 2021. Indian textile industry has a large demand for Australian cotton.

  • Immediate duty-free access within a quota of 300,000 bales per year.


Resources and Energy: The agreement includes the phased elimination of tariffs on bituminous coal and crude petroleum over four years.

Item and Export

Tarriff reduction

Coal

Australia exported $63 billion of coal globally in 2021. Around 21.5 per cent (valued at $13.6 billion) of these exports went to India

  • Immediate elimination of tariffs on 29 December 2022.
  • Phased elimination of tariffs on bituminous coal over 4 years.

Crude petroleum

Australia exported $10 billion of crude petroleum in 2021.

  • Phased elimination of tariffs over 4 years.

Metallic ores

Australia exported $170 billion of metallic ores globally in 2021.

  • Immediate elimination of tariffs on 29 December 2022 for manganese, copper, nickel, cobalt, aluminium and tin ores.

Alumina

Australia exported $7.6 billion of alumina globally in 2021. Half of Indian imports of alumina comes from Australia.

  • Immediate elimination of tariffs on entry into force on 29 December 2022.

 

Titanium dioxide

Australia exported $784 million of titanium dioxide globally in 2021. India is Australia’s first destination of titanium dioxide making 18 per cent (valued at $138 million) of Australia’s exports

  • Immediate elimination of tariffs on entry into force.

 

Non-ferrous metals

Australia exported $11.5 billion of non-ferrous metals to the world in 2021

  • Elimination of tariffs on 29 December 2022 for copper alloys and most nickel products.

 

Manufacturing: Tariffs on a range of manufactured goods, including pharmaceuticals and cosmetics, will be phased out over several years.

Item and Export

Tarriff reduction

Pharmaceutical products

Australia exported $2.6 billion of pharmaceutical products to the world in 2021.

  • Phased elimination of tariffs over 4 years.

Cosmetics

Elimination of 20% tariff on 29 December 2022.

 

  • Elimination of 20% tariff on 29 December 2022.

Wood and paper products

Australia exported $2.8 billion of wood and paper products to the world in 2021.

  • Phased elimination of tariffs of up to 20% on wood and wood products, including sandalwood chips, over 6 years.

Infant formula

Australia exported $415 million of infant formula globally in 2021. Duties on Australian exports to India are 50 per cent.

  • Phased elimination of tariffs over 6 years.

 


Comprehensive Benefits to Australian Businesses

Sensitive products: Many sensitive products such as milk, dairy products, wheat, sugar, iron ore, apples, and walnuts have been kept in India’s exclusion list, ensuring protection for these sectors.

Horticulture: The agreement includes the phased elimination of tariffs over six years on various horticultural products such as avocados, certain peas and beans, onions, leeks, asparagus, cherries, berries, macadamias, cashews in-shell, shelled pistachios, and hazelnuts. There is also a reduction of tariffs over six years for apricots, garlic, and strawberries.

Wool: Australia exported $3.1 billion of wool globally in 2021, and India remains one of the key markets. The agreement ensures the immediate elimination of tariffs on wool.

Wine: The agreement includes a phased reduction of tariffs on wine, with a 150% tariff cut to 100% on 22 December 2022 and further phased to 50% over nine years for bottles valued over US$5. For bottles valued over US$15, the tariff is cut to 75% and phased to 25% over nine years.

Cotton: The agreement provides immediate duty-free access within a quota of 300,000 bales per year for Australian cotton, which is in high demand by the Indian textile industry.

Pharmaceutical Products: Australia exported $2.6 billion of pharmaceutical products to the world in 2021. The agreement includes the phased elimination of tariffs over four years.

Cosmetics: The agreement ensures the elimination of a 20% tariff on cosmetics.

Wood and Paper Products: The agreement includes the phased elimination of tariffs of up to 20% on wood and wood products, including sandalwood chips, over six years.

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Things you should know 

The Article has been published for general information purposes only. As this information has been prepared without considering your objectives, financial situation or needs, you should, before acting on this information, consider its appropriateness to your circumstances, if necessary, seek professional advice. The Bank believes that the information in the report is correct and any opinions, conclusions or recommendations are reasonably held or made, based on the information available at the time of its compilation, but no representation or warranty, either expressed or implied, is made or provided as to accuracy, reliability or completeness of any statement made in the report. Any projections and forecasts are based on a number of assumptions and estimates and are subject to contingencies and uncertainties. Different assumptions and estimates could result in materially different results.

1 Australia-India ECTA benefits for Australian goods exporters - Department of Foreign Affairs and Trade, December 2022