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India-Australia pact kicks in; zero duty for 96.4% exported goods

The government has begun reaching out to exporters of apparel, chemicals, plastics, gems and jewellery, engineering goods and technical textiles to take advantage of the duty concessions offered by the India-Australia Economic Cooperation and Trade Agreement (ECTA), which comes into force Thursday.

Australia is offering zero-duty access to India from day one for about 96.4% of the products exported, including many that currently attract 4-5% customs duty in Australia, such as leather, textiles, and gems and jewellery.

"This ECTA has a higher value addition of 35% to specify the country of origin to avoid circumvention from other countries. We expect gains in many sectors where China, Vietnam and Bangladesh enjoy zero-duty access in Australia," said an official.

India's textiles and apparel exports to Australia are expected to grow to $1.1 billion from $0.5 billion in the next three years.

"With the India-Australia ECTA getting operationalised, India will have a slight duty advantage over Vietnam and Indonesia for imports in the Australian market. India's readymade garment exports to Australia would grow three times by 2025," said Sudhir Sekhri, vice chairman of the Apparel Export Promotion Council.

While India's exports are diversified, ranging from agriculture, garments and railway engines to telecom, 95% of India's imports from Australia are raw materials and mining products needed by industry. India's goods exports to Australia were $8.3 billion and imports were $16.75 billion in 2021-22. The Directorate General of Foreign Trade on Wednesday notified the procedure for allocation of tariff rate quotas for imports of certain Australian products, including lentils, almonds, oranges and pears under the agreement.

"We will be able to compete against Vietnam and also get an extended market in the long term in Australia. The ECTA gives us an advantage as we are getting an additional tool in terms of low tariffs, but we are watching what other countries do with their trade agreements," said Rafeeque Ahmed, chairman of the Farida Group, one of India's largest shoe manufacturers and exporters. The group supplies to brands such as Adidas, Clarks, Marks & Spencer, Debenhams and Bally Shoes.


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