ECTA, the Australia-India Economic Cooperation and Trade Agreement, aims to secure Australia’s position in India’s rapidly growing economy. It serves as a stepping-stone towards a comprehensive agreement and facilitates tariff elimination or reduction on Australian goods exports. The agreement also opens new service markets aligned with India’s domestic reform priorities. India is an important trading partner for Australia, and the economies are complementary. ECTA builds on the existing strong foundation and offers new opportunities for trade diversification, benefiting Australian businesses.
The Services section of ECTA highlights the significance of India as Australia’s third-largest services export market. ECTA aims to provide increased certainty for Australian service suppliers already operating in India by aligning market access with existing settings and commitments made in other trade agreements. Australian services suppliers will gain access to over 85 Indian services sectors and subsectors, including higher education, business services, research and development, communication, construction, insurance, banking, and tourism. India has also agreed to extend any future services market access improvements to Australia in 31 sectors and subsectors. The agreement offers opportunities for Australian financial service providers, retailing, franchising, and wholesale distribution services. Australian internet services businesses can expand with a foreign equity limit of 74 percent for commercial presence. The level of access India will gain to Australia’s services market is consistent with approaches taken in other free trade agreements, including market access commitments at the state and territory level.
Tourism (New options for young Indians to come to Australia):
Australia will offer new access for young Indians to participate in working holidays, with an annual quota of 1,000 places. This initiative is expected to meet workforce requirements and boost tourism in regional Australia. The agreement also promotes reciprocal knowledge exchange by allowing Australians who have completed their studies to gain professional experience in India, while former Indian students can temporarily live, study, and work in Australia after graduation.
Indian students will be eligible for the Post-study work visa, which offers varying lengths of stay based on their educational qualifications, ranging from 18 months for diploma or trade qualifications to four years for doctoral degrees. Additionally, bachelor’s degree graduates with first-class honours in Science, Technology, Engineering, Mathematics, and Information and Communications Technology sectors will have their post-study stay extended from two to three years. India will also establish a reciprocal work-based immigration route for Australian graduates who wish to gain professional experience in India after completing their studies.
The Mobility aspect of ECTA focuses on enhancing people-to-people connections, supporting trade and business activities, and fostering cultural exchange between Australia and India. The agreement facilitates access for skilled service providers, investors, and business visitors from both countries, promoting investment and providing greater certainty for businesses. Australia’s commitments on mobility align with existing visa settings and previous free trade agreements, ensuring the integrity of the visa system. While ECTA does not waive labor market testing, employers in Australia still need to provide evidence of testing the local labor market when necessary. Australia has obtained clarity on visa pathways and application procedures from India, enabling outward mobility for businesses and professionals. The commitments include reasonable processing of applications without undue delays, emphasizing the importance of timely service and trade facilitation. These commitments go beyond what India has previously offered in other free trade agreements or at the World Trade Organization.
The Professional Services section of ECTA establishes a Professional Services Working Group to streamline the recognition of qualifications, licensing, and registration procedures between Australia and India. Both countries will engage their professional services bodies to negotiate mutual recognition agreements for qualifications and procedures in regulated occupations. This encourages collaboration and facilitates communication between professional bodies. The Trade in Services Chapter addresses regulatory red tape in India to assist Australians, including Small and Medium-Sized Enterprises, providing professional services in India. ECTA mandates transparent fees, reasonable timeframes, status updates, acceptance of electronic applications, and eliminates the need for physical presence for application processing. Additionally, Australia has provided market access for culturally significant occupations, allowing 1,800 qualified professional traditional chefs and yoga instructors to enter India as contractual service suppliers.
ECTA is expected to significantly contribute to the recovery of Australia’s tourism sector. India has committed to providing unrestricted market access for Australian hotel, lodging, travel agency, and tour operator services through cross-border supply and commercial presence. The agreement will benefit education-related travel services, Australia’s largest services export, and enhance the “head turning” effect by introducing a new Work and Holiday program and incentives for Indian students to study in Australia through the Post-study work visa outcome.
Transparency and reducing non-tariff barriers to trade
The Transparency and reducing non-tariff barriers to trade section highlights the commitment of Australia and India to ensure transparency in applying non-tariff measures and prevent them from creating unnecessary trade obstacles. This commitment is aimed at strengthening the trading relationship, as previous non-tariff measures had hindered the smooth flow of Australian exports to India. ECTA includes provisions for both countries to publicly disclose their laws, regulations, decisions, and rulings related to the Trade in Goods chapter, making it easier for Australian businesses to operate in India. The agreement also establishes a Committee on Trade in Goods to facilitate consultations on trade issues, focusing on accelerating tariff elimination and addressing non-tariff barriers to enhance bilateral trade in goods.
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