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SENDING A STRATEGIC MESSAGE
What the article is about?
- Talks about the potential of increased interaction between India and Australia in the light of recent IndAus ECTA.
Syllabus: GS-II International relations, Regional grouping and bilateral relations
IndAus ECTA:
- The India-Australia Economic Co-operation and Trade Agreement (IndAus ECTA) eliminates tariffs on more than 85% of Australian goods exports to India (valued at more than $12.6 billion a year).
- With a GDP expected to grow at 9% in 2021-22, India is the world’s fastest-growing major economy.
- Over the five years leading up to the pandemic, two-way trade and investment between Australia and India doubled.
- IndAus ECTA is expected to increase bilateral trade from AUD$36.7 billion to AUD$60 billion.
- Through IndAus ECTA, tariffs on a range of Australian exports to India, including coal, lentils, sheep meat, wool, lobsters and rare earth, will be eliminated.
- The deal also includes a phased reduction of tariffs on wine and agricultural products including avocados, cherries, nuts and blueberries.
- The deal also extends to enhancing services exports and strengthening our people-to-people links, including a quota for chefs and yoga teachers, a post-study work visa of 2-4 years for Indian students on a reciprocal basis, mutual recognition of professional services and other licensed/regulated occupations, and work and holiday visa arrangements for young professionals.
- The role of the Indian diaspora as a key national economic asset should not be underestimated in this deal.
- Data from the India Economic Strategy Update confirm that nearly one in five overseas students in Australia are from India, making full fee-paying Indian students the largest group of overseas students.
Concerns:
- Yet the Russian invasion of Ukraine remains a ‘balancing act’ for India.
- Half of its arms imports come from Russia and some 70% of its military hardware is Russian-made.
- The need for India’s military diversification is now greater than ever.
- Australia is limited in its delivery on this front.
- In the past, Canberra’s fierce response to India’s 1988 nuclear tests and the Indian media’s over-the-top reaction to attacks on Indian students in Melbourne in 2009-2010 had almost derailed ties.
Conclusion
- With the turbulence faced by both nations in the Indo-Pacific region, the convergence of economic and geopolitical risks is real.
- ECTA is a clear response to those changing dynamics that both countries face.
- And the fact that India today counts on the support of Australia through the Quad and maritime security and now through a trade agreement shows the diversification of its strategic and economic approach.
