The Australia-India Economic Cooperation and Trade Agreement (AI-ECTA) came into effect on December 29, 2022, improving economic ties between Australia and India. This agreement could also help India embrace free trade and move away from protectionism. Historically, India has favored economic protectionism, but it began opening up its economy in 1991. However, in recent years, protectionism has resurfaced in India, with increased tariff rates and bans on certain electronic devices. This trend goes against India’s ambition to become a manufacturing hub and compete with Southeast Asia in attracting companies moving out of China. One of the main concerns for India regarding free trade agreements is the trade deficit it faces with other nations. India worries that such agreements benefit other countries more than its own inefficient local industries. As a result, India withdrew from the Regional Comprehensive Economic Partnership (RCEP) and has taken a cautious approach by negotiating interim free trade agreements. The early results of the AI-ECTA have shown a decrease in the trade gap between Australia and India, with increased Indian exports in pharmaceutical goods, electrical machinery, and iron and steel products. This trade deal has diversified Australia’s trade markets and could convince Indian officials of the benefits of free trade agreements and tariff elimination. It could also attract multinational corporations to set up bases in India and help India become a major manufacturing hub.
>>Join our Facebook Group be part of community. <<