A mature partnership

Just a week after India’s prime minister and his Australian counterpart held a virtual summit, the countries signed an Economic and Trade Cooperation Agreement (ECTA) on Saturday. The agreement aims to double bilateral trade to $50 billion over the next five years and facilitate the movement of people, goods and services across borders. ECTA marks another milestone in the burgeoning trade relationship between the two countries and could potentially establish a solid foundational framework for broader India-Australia relations over the coming decades. Talks around the finalization of the Comprehensive Economic Cooperation Agreement (CECA) are already underway, which could materialize in the years to come. The two countries have experienced an unprecedented thaw over the past decade – with cooperation shifting from bilateral to strategic level and then to comprehensive strategic partnership. During the virtual summit held last week, the two countries even announced an institutionalized annual summit, which is a big leap forward in the bilateral Indo-Australian relations. The improvement in India-Australia relations can be attributed to several factors. First, a more concrete conceptualization of the Indo-Pacific was made possible through the augmentation of the Quad grouping. Australia and India have emerged from their cocoons in the Western Pacific and the Indian Ocean, respectively, to have a common engagement in the Indo-Pacific. Needless to say, the perception of a common challenge in the form of China has been an accelerating force in bringing the two Quad partners closer together. Australian leaders have come to realize that they are rather overly dependent on China for trade matters and that India, alternatively, not only offers a promising market but also a resilient supply chain medium. Long known for having a convergence of democratic principles and values, the two countries are now clearly able to visualize a convergence of interests as well. Looked at in a broader framework, ECTA may, in fact, be a prelude to the Comprehensive Economic Cooperation Agreement (ECSC) which for one reason or another failed to come to fruition over the last decade. According to the Trade Minister’s remarks, ECTA will facilitate duty-free access on more than 96% of Indian exports, including several labour-intensive industries. India will reciprocate by allowing preferential access to Australia on 70% of its tariff lines on imports of goods. Such a degree of conciliation between the two parties is a clear signal of greater openness of the economies between them. Notably, Australia is among the group of countries with which India is eager to finalize free trade agreements. Finalizing an FTA is a complex and lengthy process, and rightly so, as it is generally known to conflict with the interests of local producers and manufacturers. ECTA is an indicator that the Indian government will spare no effort to finalize and reap the benefits of FTAs ​​with countries like UK, UAE, Israel, EU, Canada, etc. – and that too in the fastest way possible. It is reported that India is set to finalize ‘early harvest arrangements’ with the UK in the coming months. Prior to ECTA, the Indian government signed a similar agreement last week with the United Arab Emirates. Emboldened by record export growth of over $400 billion, the government has made clear its intention to make export-led growth the way forward for India. Besides the fact that it is gradually approaching the CECA, the recently concluded ECTA agreement is also important from the point of view of diasporic relations. Traditionally, Australia has been known to be rather hostile to migrants but, in the case of India, the ECTA agreement succeeded in sealing a deal regarding 2-4 year visas for Indian students in Australia. It should be noted here that the Indian diaspora in Australia stands out for its involvement in skilled services, largely. Interestingly, neither in the virtual meeting between the two prime ministers nor in the negotiations around ECTA did the mention of wider geopolitical issues like the Ukraine crisis or Chinese belligerence come to the fore. This indicates the level of maturity and independence that India-Australia relations have acquired over the years. Both sides have also reaffirmed that the change of political regime in the future will not affect the relationship – possibly referring to the elections scheduled in Australia later this year. A stable bilateral relationship with Australia is of immense value to India.