Following decade-long negotiations, India and Australia signed the Economic Cooperation and Trade Agreement (ECTA) on 2 April 2022 with the aim of liberalising bilateral trade. The ECTA is in essence an interim or early harvest trade agreement to boost trade before the two countries agree on a more comprehensive economic trade agreement, which is already under consideration.

India and Australia have a long history of bilateral trade, with Australia being one of the largest trade partners for India. As per the Ministry of Commerce and Industry, trade between the two countries reached $20.4 billion in the financial year 2020-21 – with trade in goods amounting to $12.3 billion, and trade in services amounting to $8.1 billion. However, the balance of trade remained in favour of Australia, with India having a trade deficit of $7.8 billion.

India is Australia's seventh largest trade partner. India's major exports to Australia comprise:

  • oil and petroleum;
  • pharmaceuticals;
  • diamonds and jewellery;
  • machinery and mechanical appliances;
  • iron and steel; and
  • textile and clothing.

On the other hand, India is also a major importer of goods from Australia and the major imports comprise:

  • coal and natural gas;
  • articles made of aluminium, iron, steel and other metals;
  • waste and scraps of iron, steel and aluminium;
  • gold and silver;
  • manganese ores; and
  • wool and food grains.

In addition to the above, India has major potential to export motor vehicles, pneumatic rubber tyres and ceramic tiles to Australia – India has only tapped into less than 20% of this export potential. With the signing of the ECTA, India has an opportunity to take advantage of this and increase its export market in Australia by enhancing existing exports, as well as by exploring its potential to export products such as motor vehicles pneumatic rubber tyres and ceramic tiles.


Considering the significant trade relationship between the two countries, particularly with regard the trade in goods, India and Australia have agreed to lower or eliminate tariffs in most cases and to increase market access for their products. Accordingly, Australia has agreed to eliminate taxes on 100% tariff lines of goods exported from India. While taxes on 96.4% of tariff lines (comprising 98% of all exports from India) will be eliminated with immediate effect on the date of coming into effect, taxes on remaining tariff lines will be eliminated in due course.

In exchange, India has offered tariff elimination on 70% of tariff lines from Australia, with immediate tariff elimination on 40% tariff lines. Since exports from Australia majorly comprise of intermediate or raw materials, such as coal, iron, steel, aluminium and manganese, tariff elimination on such products would result in reduction of raw material prices for the Indian industry. It is important to note that India imports significant volume of coal from Australia, which is a major source of thermal energy for the Indian industry. Once the agreement comes into force, tariff on coal would be reduced from 2.5% to 0%, which would help fulfil the demand-supply gap in the country, as well as reduce costs. All dairy products and major agricultural products, such as wheat, rice, maize, bajra and certain fruits and vegetables, have been kept in the elimination list of the tariff schedule, and thus there will be no tariff reduction on these products.


India and Australia have also agreed on various concessions with regards the pharmaceutical sector, as well as trade in services. Both countries have agreed to recognise the regulatory certificates issued by the regulatory authorities in accordance with the laws in each country, for prescription medicines and medical devices. This step is of major importance to India, as pharmaceutical exports account for a major share in the total exports from India.

Further, both countries have also agreed to grant concessions to various service sectors, which is to the benefit of India, as it is emerging as one of the largest exporters of services.

In order to gain the benefit of concessions, the goods must comply with the rules of origin prescribed under the ECTA. The agreement provides for general rules of origin, as well as for product specific rules of origin.


In order to ensure that sufficient remedies are available to the industry against any possible serious deterioration in performance due to increased exports, the ECTA provides for imposition of bilateral safeguard measures, in addition to existing trade remedial measures (eg, anti-dumping, anti-subsidy and safeguard measures).


The India-Australia ECTA is expected to boost trade to reach $45-50 billion in the next five years. Both countries are also in the process of negotiating a Comprehensive Economic Partnership Agreement, which is expected to be finalised in the next 12 to 18 months. As India moves towards becoming a major global exporter of goods and services, the ECTA can be a favourable step for the Indian trade industry, which can draw immense gains from this agreement by increasing its markets and tilting the trade balance in its favour.

For further information on this topic please contact Ojasvi Nautiyal or Nihit Gupta at TPM Solicitors & Consultants by telephone (+91 11 4989 2200) or email ([email protected] or [email protected]). The TPM Solicitors & Consultants' website can be accessed at