Trade agreements with Australia and UAE

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• Recently, Various export promotion councils (EPCs) praised the trade agreements signed by India with the UAE and Australia.
  • They said that these agreements will help India in boosting its exports by granting preferential access to those markets for Indian products. 

More about the news

• The recent pacts:
  • India–UAE Comprehensive Economic Partnership Agreement (CEPA) which became effective from May 2022.
  • The India-Australia Economic Cooperation and Trade Agreement (ECTA) will come into force from December 29. 
    • India is the sixth largest trading partner of Australia.
    • India’s bilateral trade in goods and services with Australia rose 106.5% to $25.04 billion so far in 2022 compared to 2021.
• FTA’s and PTA’s 
  • India has signed 13 free trade agreements (FTAs) and six preferential pacts so far with its trading partners for ensuring greater market access for domestic goods and promoting exports.
    • The country has recently signed three such agreements with Mauritius, the UAE and Australia.
    • India is also actively engaged in FTA negotiations with some of its trading partners including the UK, European Union and Canada.

Significance of the trade agreement with Australia 

• Job creation: The trade agreement is expected to create 10 lakh jobs and raise Indian merchandise exports to Australia by $10 billion.
• Cheap imports: the ECTA will also allow zero duty on 100% tariff lines and provide cheaper raw materials to steel and aluminium sectors. The trade pact will also raise the bilateral trade volume to $45-50 billion in five years.
• Supply chain resilience: ECTA will help Australian manufacturers strengthen their supply chain resilience and enhance trade diversification while also connecting the two complementary and stable economies. 
• Jewellery exports: ECTA would help double India’s gem and jewellery exports to Australia, from its current $350 million to $800 million in three years.
• Export potential for plastics from India stands at $6 billion to Australia.
  • Import duty applicable in Australia had been reduced on all tariff lines for plastic products with immediate effect which would act as a great booster for outbound shipments. 
• Zero duty access: India is providing zero-duty access to Australia for 70.3 per cent of its tariff lines.
  • India has offered zero duty access on coal, alumina calcined, manganese ore, copper concentrates, bauxite, sheep meat, rock lobster, macadamia nuts, cherries, and wool.
  • Australia is offering zero-duty access to India for about 96.4 per cent of exports. 

Significance of the trade agreement with UAE

• Boost in exports: The country had benefited from preferential market access provided by the UAE on more than 97% of its tariff lines which account for 99% of Indian exports to the region in value terms.
• Bilateral trade: The CEPA with the UAE is expected to increase the total value of bilateral trade in goods to over $100 billion and in services to more than $15 billion within five years.
• Jewellery trade: Post the India-UAE CEPA, gems and jewellery exports to the region witnessed an overall export growth of 20% to the region.
• Export potential for plastics from India stands at $5 billion to the UAE.
  • Import duty applicable in the UAE on 260 plastic products has been reduced from 5% to zero with immediate effect. 

Source: TH