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ECTA: A Watershed FTA Negotiated Between IND-AUS Built on the Cornerstone of Both Nations – IMPRI Impact and Policy Research Institute

ECTA: A Watershed FTA Negotiated Between IND-AUS Built on the Cornerstone of Both Nations - IMPRI Impact and Policy Research Institute



The India-Australia Economic Cooperation Trade Agreement (FTA)comes at a very tricky time from a geopolitical and economic scenario. The Agreement sought to increase trade between the two countries by almost $45-50 Billion in the next five years while increasing the number of work opportunities available in both countries.

History of IND-AUS Relations

India and Australia have maintained cordial bilateral relationships since even before India’s independence. Their history goes back to 1941 and to date, Australia remains a close ally of India, being the first country with which India established diplomatic relations in the pre-independence period and one of the strongest, oldest and most consistent formal partners of Australia.

Diplomatic ties between India and Australia have been strengthened over the years through their people-to-people links, defence engagements, economic partnership and a mutually agreed stance taken by both countries on education.

The Consulate-General of India was first opened in 1941 in Sydney, and today as Australia recognises India’s profound role in the global, specifically Asian economy and looks for an alternative to their Chinese export destination, the Australian Government has sanctioned a Centre for Australia-India relations with increased resources and funding, thus showing their deep focus on India. The mandate of this institution is to strengthen business and diaspora ties.

The Unfolding of An Alliance

As India becomes the most populous country of 2023, surpassing China, potentially meaning that India will be Australia’s second-largest source of international students and the largest provider of skilled migrants, thus highlighting the importance of maintaining cordial ties with a country of such profound influence.

With almost 2.6 per cent of the Australian population being of Indian origin and Hindi being one of the top ten spoken languages of Australia, it’s safe to conclude that India is not only an important partner for Australia, but India has domesticated itself so much in this island-nation that today, Indians are culturally infused into their population, thus creating much more than just a link between these two countries. Today, they have created a nexus which stands to cooperate at the highest levels.

While Australia is identified as a highly developed country with a mixed economy, India continues to stay within the category of developing economies. That said, India’s position as the 5th fastest-growing economy in the world opens up a sea of opportunities for Australia due to India’s unfulfilled infrastructure demands, burgeoning pressure of urbanisation and lack of sufficient demand and supply conditions.

India was Australia’s sixth-largest two-way goods and services trading partner and fourth-largest goods and services export market in the world, in 2021.

Education is Australia’s largest service export to India, valued at $4.2 billion in 2021. As of October 2022, almost 57,000 Indian visa holders were studying in Australia. In light of this, the Australian government granted extended post-study work visas to Indian graduates from STEM (Science, Technology, Engineering, Mathematics), under the Economic Cooperation and Trade Agreement Act.

The ECTA was signed on April 22, 2022, and put into motion on December 29, 2023. This agreement was concluded as part of the Comprehensive Economic Cooperation Agreement (CECA).

Negotiations started back in May 2011. These talks had then been postponed till 2016 after nine rounds of negotiations, to be relaunched in 2021 to conclude a plurilateral regional agreement between the two countries in the form of India-Australia ECTA.

China’s exports to Australia outweigh India’s contribution by a large shot but the issuing of sanctions by China against most Australian exports did not go down well with the latter as it marked the beginning of a trade war between the two. Not only that, but this also unmasked Australia’s need to fetch alternatives as the Chinese tariffs began hurting wine and lobster exporters who suffered huge losses.

India’s contribution to Australian exports stood at 3.7% in 2021 as compared to China’s

33% share in Australia’s exports. The drift between Australia and China worked out well for India, as Australia’s need to take business away from China made India extremely visible as the next best nation for conducting trade.

Broad Facets of the Agreement

The essence of a trade agreement lies in its ability to help the countries involved, in maximising their trade base at the lowest possible cost.

The India-Australia pact is not only a glowing example in this respect but also a landmark development in the history of India as it was the second such high-level bilateral trade pact signed by India, after signing one with the United Arab Emirates in February 2022.

The ECTA is expected to increase trade between the two sides to US $45-50 Billion from the current US $27 Billion and create around a million additional jobs.


  1. Ministry of Commerce & Industry: PIB Release


  1. WORLD TRADE ORGANIZATION: Modalities for Pre-establishment Commitments


  1. India country brief: Australian Government: Department of Foreign Affairs and Trade


  1. Centre for Australia-India Relations: Australian Government: Department of Foreign Affairs and Trade


  1. India-Australia ECTA is a landmark in bilateral relations and will deepen ties


  1. India-Australia ECTA comes into force https://www.newdelhitimes.com/india-australia-ecta-comes-into-force/
  1. ECTA: A game changer to bilateral trade between India and Australia


Nayana is a Research Intern at IMPRI.

Read more by the author: Alterations Brought in by the National Education Policy Through the National Curriculum Framework.

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