India-Australia trade agreement: 4 takeaways for Indian sellers
Tilak Shrivastava
16+ years B2B SaaS marketing leader | 55% ARR growth YoY | ex-Avalara & Zoho | expert in product scaling & growth hacking
The latest tittle-tattle amongst the import-export businesses in India is the new treaty between India and Australia:
The India-Australia Economic Cooperation and Trade Agreement.
Ind-Aus ECTA sounds like some juice for Indian import-export companies as it will open new markets for Indian exports and allow cheaper sourcing alternatives for Indian companies.
Scott Morrison, the prime minister of Australia, calls it "two dynamic regional economies, like-minded democracies, working together for mutual benefit."
Prime Minister Narendra Modi mentions it as a "watershed moment."
What are the facts you should know?
How will this treaty benefit us?
Zero duty access to Indian exports:
It will allow zero duty access to India for 96% of the Indian exports compared to a 4-5% import duty that is currently in place. Because of the prevailing duty, Indian exports are at a disadvantage in the Australian markets against the goods from China, Thailand, Vietnam, South Korea, Indonesia, Malaysia, and Japan.
Open doors for imports from Australia:?
On the other hand, India is removing tariffs on 40% of its tariff lines, which will, in turn, allow 85% of the Australian exports to open the doorway. Such exports include sheepmeat, wool, coal, and copper.
Increase in employment opportunities:
The treaty seems beneficial for many labor-intensive sectors, bringing more job opportunities.
Easy commute opportunities to Australia:
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It will allow an easy visa process for students and working professionals willing to take a work vacation in Australia.
How can you make the most of the treaty?
The treaty sounds promising for sellers from both nations regarding business opportunities. Down below are sectors that will benefit from them.
Trade of goods with Australia-
India's exports to Australia are mainly consumer goods and manufactured goods. Most of these will enjoy duty-free trade like
Currently, some of these attract 4-5% of duties, making them expensive to buy compared to products from other countries.
For example, suppose?FabIndia is exporting bathroom linen to Australia.?In that case, it has to pay duties, making the products costlier in the buyers' hands compared to other countries with FTAs. This treaty will smoothen things out in that area making Indian exports more competent. The best part is the ease in the process of approval for pharma products. This will benefit the pharmaceutical sector by encouraging exports exponentially.
Another sector to reap benefits is the?textile industry. There is excellent potential for textiles, home linen, and apparel in Australia. Currently, Indian exports are falling behind compared to other countries with foreign trade agreements with Australia. But once this treaty comes into force, our textile industry will benefit highly from it.
Provision of services in Australia-
While there are many benefits in terms of goods trade, there are many in store for the service sector. There are special quotas for easing visas and other formalities for chefs and yoga teachers, allowing them to commute and stay up to 4 years for work in Australia. Post-education work visas would also be easier to get. Australia has also allowed work and holiday visas for Indians (18-30 years) for up to a year. This treaty will not only provide better opportunities for students and the working class but also better the trade relations between the two countries. Another good news that the treaty brings is for the Indian companies in the IT sector. The Australian government will amend the Australian domestic taxation law to avoid double taxation and evasion of taxes. Apart from that, the healthcare sector and the education sector will also benefit from this agreement. We will see more research-based collaborations between the universities of the two countries.
What stays out of the treaty and why?
While the treaty seems to open doors for trade, the government has kept some tariff lines out of the treaty to safeguard the interests of the local organizations.
So if you are a seller looking out for newer markets around the globe, now is the time to invest in Australia, especially if you are into pharma products, apparel, textile, leather, or footwear. Now is the time to make the most by selling in Australia.
Disclaimer: Originally posted on the?Avalara blog.