A growth agenda for India- Australia economic ties

ORF
2024.06.03

Energy, technology, education, and agriculture – India and Australia have taken significant steps in each sector over recent years to enhance cooperation and build on existing trade. The Economic Cooperation and Trade Agreement (ECTA) set down in September 2021 marks a significant milestone in this effort, which both governments see as poised to increase trade volumes by streamlining digital processes and eliminating tariffs on a substantial portion of goods. This agreement is hoped to pave the way for the more ambitious Australia-India Comprehensive Economic Cooperation Agreement (AIFTA), with Australia aiming to place India among its top three export markets by 2035.

Opportunities are also seen in India’s food security by reducing tariffs on Australian pulses and lentils, providing Australian farmers better access to the Indian market. India can, in turn, increase exports of fruits such as mangoes to Australia, creating a more efficient value chain that reduces food waste and spoilage. Indeed, collaborative efforts in modern manufacturing and food processing can lead to more efficient and competitive global value chains.

While the ECTA has opened numerous opportunities, several obstacles hinder the full realisation of these potential benefits. One major obstacle is the regulatory and infrastructural differences between the two countries. Harmonising standards and certifications, particularly in sectors such as agriculture and pharmaceuticals, poses significant challenges. This regulatory divergence often leads to delays and increased costs for businesses attempting to navigate both markets.

Technological advancements in digital economics, especially blockchain and digital payments, offer promising solutions to streamline trade between India and Australia. Digital payment systems such as Australia’s PayID and India’s Unified Payments Interface can reduce trade costs by as much as 16 per cent, according to a 2022 World Bank report. Digital payments can enhance trade efficiency by enabling seamless transactions and reducing reliance on traditional methods such as letters of credit. E-commerce platforms can connect businesses and consumers globally, opening new markets for both Australian and Indian goods.

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