The Australian parliament has ratified the Australia-India Economic Cooperation and Trade Agreement (AI-ECTA) with India, following clearance from the Australian Joint Standing Committee on Treaties. The AI-ECTA is reportedly expected to be implemented on 1 January 2023.
This is India’s first trade partnership with a developed nation in more than a decade. The last one the country signed was the economic cooperation and trade agreement with Japan in 2011.
“This ‘early harvest’ agreement with India paves the way for further trade, market access, investment and regulation that requires global co-operation. The AI-ECTA also ensures that Australia will not be excluded from improved trade and market access, which may arise from agreements India subsequently negotiates with other nations,” said Joint Standing Committee chair Josh Wilson, MP.
The double tax avoidance agreement between Australia and India was also modified by the Australian parliament to stop taxing the overseas profits of Indian information technology firms doing business in Australia. Double taxation is a long-standing trade problem between the nations, reportedly costing income-tax paying organisations more than USD200 million annually.
In May 2011, Australia and India began discussions over a Comprehensive Economic Cooperation Agreement. Before deciding to halt talks in 2016 pending the conclusion of other multilateral regional agreements, both countries held nine rounds of negotiations.
India and Australia formally relaunched negotiations in September 2021, concluding with the ratification of the AI-ECTA on 23 November. The agreement will come into force once the Australian Cabinet and India’s president approve it. After an exchange of written notices at the end of domestic proceedings, the ECTA will come into effect 30 days later.
