India Trade Pact
India on 2nd April 2022 signed a historic free trade agreement with Australia that will make Australian exports and imports to India cheaper which will create huge new opportunities for workers and businesses.
In 2020, India was Australia’s seventh-largest trading partner, with two-way trade valued at $24.3 billion, and the sixth-largest goods and services export market, valued at $16.9 billion. The free trade agreement between Australia and India would benefit both countries.
“Annual bilateral trade is expected to almost double from $27.5 billion in 2021 to about $45 billion or $50 billion in the next five years.”
Australia will offer zero-duty access to India for about 96.4 percent of exports (by value) from day one. The free trade agreement will cover many products which currently attract 4-5 percent customs duty in Australia. Labor-intensive sectors which would gain immensely include textiles and apparel, few agricultural and fish products, leather, footwear, furniture, sports goods, jewelry, machinery, electrical goods, and railway wagons.
Australian companies that are looking to do business in India should have a very clear idea of the goal they want to achieve in the Indian region. To properly reap the benefits of the free trade agreement, you should always engage a consultant who can better help you with the entry or expansion in the Indian market.
Trade Pact Benefits for India – Sector Wise
- Pharmaceuticals: Fast track approval for patented, generic, and biosimilar medicines using the Comparable
Overseas Regulator pathway, and fast track quality assessment/inspections of manufacturing facilities.
- Textiles: 70% textile products and 90% apparel products attract 5% duty in Australia. This tariff will be
eliminated, and India’s exports of textiles and apparel are expected to go up from US$ 392 million to US$ 1100 million in the next 3 years.
- Engineering Products: Elimination of 5% customs tariff in Australia on Export of Iron and steel products, scientific
and medical instruments, parts, transport equipment, and non-electrical and electrical machinery.
- Gems and Jewellery: Elimination of current 5%custom duty on Jewellery items in Australia.
- Leather & Footwear: Around 94% of India’s exports of leather products to Australia attract a duty of 5%. With to reach US$ 100 million in the next 2 years.
Trade Pact Benefits for Australia – Sector wise
Australia will benefit a great deal from India’s enormous market size of more than one and a half billion. The free trade
agreement is great news for lobster fishers in Tasmania, wine producers in South Australia, macadamia farmers in Queensland, critical minerals miners in Western Australia, lamb farmers from New South Wales, and wool producers from
Victoria, and metallic ore producers from the Northern Territory.
Preferential tariffs for Australian goods exports to India
- Sheep Meat – Elimination of tariffs on entry into force (EIF).
- Wool – Elimination of tariffs on EIF.
- Seafood – Elimination of tariffs on entry into force for fresh rock lobster and elimination of tariffs over 7 years for other fresh, frozen, and processed seafood products.
- Infant formula – Elimination of tariffs over 7 years.
- Barley, oats, and lentils – Locked-in duty-free entry for barley and oats and immediate 50% reduction for in-quota exports of lentils.
- Nuts – Elimination of tariffs over 7 years on cashews, macadamias, shelled pistachios, and
hazelnuts. For almonds, immediate 50% tariff reduction on in-quota exports.
- Fruit and vegetables – Elimination of tariffs over 7 years for avocados, onions, cherries, and berries.
Reduction of tariffs over 7 years for apricots and strawberries. For oranges, mandarins, and pears, immediate 50% tariff reduction for in-quota exports.
- Wine – Tariff reductions over 10 years for bottles over import prices of US$5 and US$15 and guaranteed best market access by India in any future FTA.
- Resources – Elimination of tariffs on entry into force for coal, alumina, metallic ores such as copper, manganese and zirconium, titanium dioxide, and certain non-ferrous metals.
The two sides hope to conclude negotiations on a broader, comprehensive economic cooperation agreement by the end of this year.
If you are an Australian company looking to avail the benefits of this ambitious trade pact but are not sure whom to approach, you can consult a partner like Maier Vidorno Altios who can help your business to enter or expand in India.
Maier Vidorno Altios provides a full range of professional services including global growth strategy, partner search,
and venture validation, local sales and business development, accounting, payroll and tax services, and HR solutions including recruitment, outsourced employment, and HR advisory services, cross-border acquisition, and site location.
For the first time since the start of the pandemic, Australia is reopening its borders. The roadmap announced by the prime minister Scott Morrison is gradual and country specific for fully vaccinated travellers. Interstate travel has been granted from the 1st of November between New South Wales and Victoria whilst fully vaccinated travellers from New Zealand are now able to enter Australia.
From November 21st a travel bubble with Singapore will come into effect and allow quarantine-free travel between the two countries. Other countries will be addressed during the coming months.
Access the full article: https://www.cnbc.com/2021/11/01/australia-reopens-its-borders-to-new-zealand-and-singapore.html