Australia-India Agree $50b Trade Agreement! What Does It Mean For You?
India is quickly becoming Australia’s leading sourcing hub for homeware. Fueling that, both countries are the fastest growing economy globally.
After China restricted and sanctioned Australian exports, it is essential to seek viable alternatives. This is where this deal helps, widening the horizons of two-way trade between the countries. Read on below to understand what this means and why you should re-source from India as an Australian business.
In 2020, India was Australia's seventh-largest trading partner, with two-way trade worth $24 billion. With this deal coming in, it is estimated to reach $50 billion within just five years. India's exports of goods and services are predicted to increase from $10.5 billion in 2021 to over $35 billion by 2035.
One of the most important outcomes is reducing and eliminating tariffs over a wide range of goods. Immediately, there will be zero duty on the 96.4% value of Indian exports. Not only this but non-tariff technical barriers will also be handled, apart from sanitary and phytosanitary restrictions. Additionally, raw materials imported from Australia are set to get cheaper since tariffs on 85% of Australian goods exports will also be eliminated and ensure an uninterrupted supply of raw materials. Hence, many industries in India will become more competitive. IndAus ECTA provides duty-free market access to over 6,000 broad sectors of India, including textiles, leather, furniture, jewelry, and machinery. This agreement will generate opportunities to create over 1 million new jobs.
Both countries have also launched the Australia India Infrastructure Forum, which encourages two-way investment in infrastructure to support trade. Under the Low Emissions Technology Partnership, there's a greater focus on low-cost solar and hydrogen technology. Under the Comprehensive Strategic Partnership, Australia and India are focused on expanding commercial partnerships and strengthening supply chains.
A robust Indo-Pacific framework will emerge from the enrichment of ties between the two vibrant democracies. Based on the flow of goods, building connections, complementarities, sustainability, and co-dependence across regions. This pact is looking to only expand with the committee commencing negotiations soon to explore market access for goods and services to transition from an FTA (free-trade agreement) to a CECA (comprehensive economic cooperation agreement).
If you need a little more convincing, here are 3 facts that show why India is the place to source from!
The OECD projects that India’s economy will grow 12.6% in 2021. This will make India the only major country to achieve double digit growth in 2021 (OECD Economic Outlook, Interim Report March 2021, accessed March 2021).
Doing business in India has become easier for the fourth consecutive year! India has moved up 14 places to rank 63rd among 190 countries for ease of doing business. (Source: World Bank, Ease of doing business index, accessed March 2021).
India is the world's fastest-growing economy and the 3rd largest economy in terms of purchasing parity. World Economic Outlook Database, October 2019
Now, the question has shifted from "Why in India" to "How in India," and that's where we come in. With our 20 years of network built on connections and relationships, we are your sourcing partner in India.
To know more, get in touch with us today.