India-Australia Bilateral Relations

Context: The India-Australia Economic Cooperation and Trade Agreement (IndAus ECTA) has recently come into effect. The ECTA was signed on April 2, 2022, and was ratified on November 21, 2022.

About IndAus ECTA:

Benefits for India:

• India will benefit from preferential market access provided by Australia on 100% of its tariff lines, including all the labour-intensive sectors of export interest to India, such as Gems and Jewellery, Textiles, leather, footwear, furniture among other, the commerce ministry said.

Benefits for Australia:

• India will be offering preferential access to Australia on over 70% of its tariff lines, including lines of export interest to Australia, which are primarily raw materials and intermediaries such as coal, mineral ores and wines

Protection to few products:

• Products like agricultural products and the dairy sector – which were very sensitive for India and without which Australia has never done an agreement before – have been protected.

Employment generation:

• It is estimated that an additional 10 lakh jobs would be created in India under ECTA.

Visa Quotas:

• Indian yoga teachers and chefs are set to gain with the annual visa quota.

Post-study work visa:

• Over 1 lakh Indian students would benefit from a post-study work visa (for 18 months to 4 years) under the ECTA.

Double Taxation Avoidance Agreement (DTAA):

• The Australian Parliament has also approved an amendment to the Double Taxation Avoidance Agreement (DTAA), a move which would help the Indian IT sector in operating in that market.
• It would stop the taxation on the offshore income of Indian firms providing technical support in Australia.

India-Australia Relations

Historical:

• India and Australia established diplomatic relations in the pre-Independence period, with the establishment of India Trade Office in Sydney in
• With the passage of time, the relationship gained momentum towards a strategic relationship, alongside the existing economic engagement.

Strategic partnership:

• Australia looks at India as an important partner in promoting regional security and stability.
• This led to upgradation of the bilateral relationship to a Strategic Partnership, including a Joint Declaration on Security Cooperation in 2009.

Bilateral Engagement:

• Bilateral mechanisms include high-level visits, Annual Meetings of Prime Ministers, Foreign Ministers’ Framework Dialogue, Joint Trade and Commerce Ministerial Commission, India-Australia ‘2+2’ Foreign Secretaries and Defence Secretaries Dialogue, Defence Policy Talks, Australia-India Education Council, Defence Services Staff Talks, etc.

Multilateral Engagement:

• Both countries have close cooperation in multilateral fora like Food and Agriculture Organization (FAO) and G20.
• The Quadrilateral Framework (QUAD) of India and Australia along with the US and Japan emphasize the collective resolve to maintain a free, open and inclusive Indo-Pacific region.
• They are also part of the Trilateral Supply Chain Initiative and the Indo-Pacific Economic Forum.

Bilateral Trade:

• India is the 5th largest trade partner of Australia with trade in goods and services at A$ 29 billion representing 3.6% share of the total Australian trade in 2017-18, with export at A$ 8 billion and import at A$ 21 billion.
• Indian exports: India’s main exports to Australia are Refined Petroleum, medicaments, Railway vehicles including hover-trains, Pearls & Gems, Jewellery, and made-up textile articles.
• Indian imports: Imports are Coal, copper ores & concentrate, Gold, vegetables, wool & other animal hair, fruits and nuts, lentils and education-related services.

Science and Technology:

• An Australia-India Strategic Research Fund (AISRF), which was established in 2006, supports scientists in India and Australia to collaborate on leading-edge research.
• AISRF consists of India Australia Biotechnology Fund; India-Australia Science & Technology Fund; Grand Challenge  Fund and Fellowship Schemes.

Civil Nuclear Cooperation Agreement:

• It was signed between the two countries in September 2014 during the visit of the Australian Prime Minister to India.
• The Australian Parliament passed the Civil Nuclear Transfer to India Bill 2016 which ensures that Uranium mining companies in Australia may fulfil contracts to supply Australian uranium to India for civil use.

Defence:

• In 2014, both sides decided to extend defence cooperation to cover research, development and industry engagement and agreed to hold regular meetings at the level of the Defence Minister to conduct regular maritime exercises and convene regular service-to-service talks
• AUSINDEX: The first-ever Bilateral Maritime Exercise, AUSINDEX, was conducted in Visakhapatnam (Bay of Bengal) in September 2015.
• Exercise Pitch Black: In 2018, the Indian Air Force participated for the first time in the Exercise Pitch Black in Australia.
• Exercise of the Australian Navy: INS Sahyadri participated in Kakadu, the biennial exercise of the Australian Navy held in 2018, in which 27 nations participated.
• AUSTRAHIND: The 4th edition of AUSTRAHIND (Special Forces of Army Exercise) was held in September 20

Indian Community:

• The Indian community in Australia continues to grow in size and importance, with a population of nearly half seven lakhs.
• India is now the third-largest source of immigrants to Australia, after the UK and New Zealand and the largest source of skilled professionals for Australia.
• There is a constant flow of students and tourists from India.

Challenges:

• India’s trade deficit with Australia has been increasing since 2001-02 due to India-Australia Free Trade Agreement.
  • It is also a contentious issue in the ongoing RCEP negotiations which India left.
• The formation of the Japan–America–India (JAI) partnership at the G20 summit in Buenos Aires in 2018 is cause for Australian concern.
  • India’s unwillingness to invite Australia to participate in the Malabar naval exercise, despite Australian lobbying, has sparked speculation over the fate of the Quadrilateral Consultative Dialogue (the ‘Quad) involving India, Australia, Japan and the United States.
• Building consensus on non-nuclear proliferation and disarmament has been a major hurdle given India’s status as a nuclear power.
  • Trade and maritime security on the other hand seem the most viable points of collaboration. Although a defence agreement was signed in 2014, the defence relationship has yet to develop fully.
• Although security has received a lot of significance in the relationship, in practice Australia-India defence cooperation remains relatively undeveloped.
  • There are a considerable number of defence and security dialogues between the two countries, but none has been translated into more substantive cooperation.
• Increasing Racist attacks on Indians in Australia has been a major issue: The relationship was further strained over the attacks on Indian students studying in Melbourne, and the resulting media coverage caused serious damage to Australia’s standing in India.

Way Forward:

The cooperation and coordination between the two countries have seen exponential momentum in recent years. The shared values, interests, geography, and objectives are the foundation of deepening India-Australia relations. Both India and Australia share a vision of a free, open, inclusive, and rules-based Indo-Pacific region.

India and Australia believe in cooperative use of the seas by following International law including the United Nations Convention on the Law of the Sea (UNCLOS) and peaceful resolution of disputes rather than through unilateral or coercive actions. The India-Australia ECTA will enhance the already close and strategic relations between the two countries.

Source:  PIB