The Comprehensive Economic Cooperation Agreement: The finalisation of the India-Australia CECA, initially expected by late 2024 or early 2025, faces significant delays as Australia’s federal elections in May 2025 are likely to stall key decisions. This setback highlights the complexities of advancing economic integration between two nations with diverse priorities and sensitivities. Despite this, the partnership has made remarkable strides under the Economic Cooperation and Trade Agreement (ECTA), which has laid the groundwork for deeper economic ties.
Over the past decade, the relationship has evolved from cautious engagement to one of strategic importance, offering immense potential for mutual growth if the challenges in finalising India-Australia CECA can be effectively addressed.
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Since the implementation of ECTA in December 2022, bilateral trade has seen substantial progress. According to the ministry of commerce and industry, export utilisation under ECTA has reached 79%, while import utilisation stands at 84%, highlighting effective adoption of the agreement’s benefits. Key sectors such as textiles, chemicals, and agriculture have recorded significant growth, with new export categories such as gold-studded diamonds and turbojets diversifying trade portfolios.
However, trade has declined during the current financial year. From April to September 2024, goods exports to Australia fell by 18% year-on-year, while imports dropped by a similar margin, reflecting a narrowing trade deficit. These declines have been attributed to reduced demand for commodities like coal and briquettes, driven by India’s energy transition and economic slowdown.
India-Australia CECA to build on ECTA foundation
The India-Australia CECA, envisioned as a more ambitious trade agreement, builds on ECTA’s framework to include broader areas such as digital trade, government procurement, and advanced rules of origin. The 10 formal rounds of negotiations and inter-sessional discussions so far have focused on resolving disagreements in critical sectors like agriculture, services, and manufacturing.
India aims to secure enhanced market access for its textiles, chemicals, and electronics industries, while also advocating for greater work visa allotments. Australia, on the other hand, seeks tariff reductions on agricultural products such as apples and lentils and improved access to India’s dairy market. Bridging these differences is essential to unlocking the agreement’s full potential.
Exploring the synergies
Energy, technology, education, and agriculture form the pillars of the India-Australia partnership. While Australia supplies India with coal, gas, and other essential raw materials, India’s export portfolio includes refined petroleum, medicines, and gems. The relationship is evolving, with opportunities in clean energy collaboration and value chain optimisation.
Australia’s technological expertise complements India’s ambitions in modern manufacturing. Similarly, India’s skilled workforce and Australia’s focus on high-value production can create efficient global value chains. Opportunities in digital trade, such as blockchain-enabled smart contracts and e-commerce platforms, further enhance the prospects for streamlined economic cooperation.
Overcoming trade barriers
Despite progress, significant barriers remain. Regulatory and infrastructural differences, particularly in agriculture and pharmaceuticals, increase transaction costs and delay market entry. Harmonising standards and certifications will be critical for overcoming these challenges.
The adoption of digital technologies, such as blockchain and electronic certificates of origin, offers solutions to streamline trade processes. Digital payment systems like India’s Unified Payments Interface (UPI) and Australia’s PayID can significantly reduce trade costs and enhance efficiency.
Geopolitical alignments and strategic importance
The geopolitical landscape in the Indo-Pacific positions India and Australia as strategic partners, offering a counterweight to China’s economic dominance. India’s cautious approach to regional trade agreements, including its withdrawal from the Regional Comprehensive Economic Partnership (RCEP), reflects its focus on protecting domestic industries while seeking balanced trade arrangements.
The bilateral relationship has shifted from polite indifference to a dynamic partnership driven by mutual benefit and strategic necessity. Both nations now have an opportunity to deepen this engagement, leveraging complementary strengths to foster economic growth.
To achieve their ambitious trade targets, India and Australia must prioritise underdeveloped sectors such as agriculture, education, and tourism while addressing structural barriers to trade. Enhanced cooperation in clean energy technologies, digital infrastructure, and advanced manufacturing can drive mutual growth.
India should focus on developing intermediaries in manufacturing and emphasising liberalisation in services. Simultaneously, Australian businesses need to invest in understanding the Indian market, addressing gaps in knowledge and familiarity.
With strong political will and a pragmatic approach to resolving differences, the India-Australia economic partnership can set a benchmark for regional cooperation. By capitalising on shared goals and complementary strengths, the two nations can transform their relationship into a cornerstone of the Indo-Pacific economic landscape.