Relevance: GS-2: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

Key phrases: CECA, FTA, India-AUS, PTA, job creation, Investment, Economic growth.

Why in News?

• Australia is committed to concluding an “interim” Free Trade Agreement (FTA) with India, Canberra’s Minister for Trade, Tourism and Investment Dan Tehan said on February 9.

India - Australia Trade Relation:

• The value of bilateral trade in goods and services between both countries increased from US$10.12 billion in 2007 to US$18.08 billion in 2020.

• In 2020, India was Australia’s seventh-largest trading partner and sixth largest export destination, driven by coal and international education. On the other hand, Australia is also an increasingly important destination for Indian exports.

• In 2020, India exported US$3.19 billion to Australia. The main products that India exported to Australia are refined petroleum (US$287 million), packaged medicaments (US$277 million), and railway passenger cars (US$166 million).

• In 2020, Australia exports to India amounted to US$15.3 billion. The main products that Australia exported to India were coal briquettes (US$12.1 billion), gold (US$604 million), and petroleum gas (US$419 million).

• Education remains Australia’s largest service export to India, valued at US$4.46 billion and accounting for around 88 percent of the total in 2020. At the end of 2020, Indian students in Australia numbered 115,137.

• The total value of two-way foreign direct investment (FDI) between both countries was valued at US$1.04 billion in 2020.

What is Comprehensive Economic Cooperation Agreements?

• It is a kind of free trade pact that aims to provide an institutional mechanism to encourage and improve trade between the two countries.
• CECA generally covers negotiation on trade tariff and TRQ (tariff rate quota) rates only. It is not as comprehensive as CEPA. India has signed CECA with Malaysia and Singapore.
• The aim of the agreement is to enhance economic and social benefits, improve living standards and ensure high and steady growth in real incomes in their respective territories by expansion of trade and investment flows.

Benefits of Comprehensive Economic Cooperation Agreements:

• CECA’s contribute to greater economic activity and job creation in India and Australia, and deliver opportunities for big and small India businesses to benefit from greater trade and investment.

• CECAs don't just reduce and eliminate tariffs, they also help address behind-the-border barriers that would otherwise impede the flow of goods and services; encourage investment; and improve the rules affecting such issues as intellectual property, e-commerce and government procurement.

• CECAs give India businesses and consumers improved access to a wider range of competitively priced goods and services, new technologies, and innovative practices.

• CECAs help India obtain more benefits from foreign investment.

• CECAs promote regional economic integration and build shared approaches to trade and investment between India and our trading partners.

• CECAs can deliver enhanced trade and investment opportunities that contribute to the economic growth of economies.

• CECAs support stronger people-to-people and business-to-business links that enhance India's overall bilateral relationships with FTA partners.

• CECAs can continue to provide additional benefits to India and trading partners over time, including via in-built agendas that encourage ongoing domestic reform and trade liberalisation.

Way forward:

• Australia and India are important trading partners, and share a strong desire to further enhance their bilateral trade relationship.
• A free trade agreement with Australia would be a boon for Indian businesses, farmers and workers, creating new jobs and opportunities with one of the world's largest and fastest developing economies.
• CECA is a potential game-changer in opening opportunities for both Australia and India. It is also an important piece of our post-COVID economic recovery.
• Australia and India regards the CECA as “important to India and Australia delivering their vision of a secure and prosperous Indo-Pacific”. Both sides support economic openness and upholding the rules-based trading system and “recognise that strong economies provide the opportunities its citizens seek”.

Source: The Hindu

Mains Question:

Q. For realising the objective of $ 5 trillion economy, India has to sign more comprehensive economic cooperation agreements with countries. Critically analyse the statement.