A free trade agreement between India and Australia started operation from the Adani Ennore Container Terminal near Chennai on Thursday, giving the two countries greater access to each other’s markets.
The Economic Cooperation and Trade Agreement (ECTA) will cover 90 per cent of bilateral trade and give India preferential access to all products it exports to Australia. India-Australia bilateral trade for merchandise and services was valued at $27.5 billion in 2021. Australia is India’s 17th largest trading partner and India is Australia’s ninth largest trading partner.
India’s exports to Australia have increased over the years but there is scope for development. Under ECTA, Indian exporters will gain preferential access to untapped areas of the Australian market. A ceremony at the Ennore terminal flagged off export consignments from Tamil Nadu.
Indian textiles and garments will gain immensely along with opportunities for the handloom sector, said A Sakthivel, president of Federation of Indian Export Organisations (FIEO) about ECTA. Other segments in Tamil Nadu that can gain larger market share in Australia are gems and jewellery, leather and non-leather footwear, handicrafts, automobile parts and engineering products. In FY22, Tamil Nadu made exports worth $384 million in Australia. From April to October in FY23, such exports were already at $322 million and are expected to cross $500 million this fiscal.
The ECTA is expected to help Indian exporters, especially MSMEs, utilise opportunities in the Australian market. India’s strength in pharmaceuticals, jewellery, vehicles, agricultural products, textiles and garments, handlooms, leather, organic chemicals, engineering and construction materials can be leveraged to gain a greater share in Australia’s import basket.
Sakthivel suggested that the infrastructure at the Ennore terminal be used as a dedicated export cargo terminal to Australia from Southern India. He said that 27 per cent of Australia’s imports comes from China, compared to India’s 2.4 per cent.