Monday 14 / July / 2025
Vancouver: CThe Australia India Economic Cooperation and Trade Agreement (ECTA), signed on April 2, 2022, and implemented from December 29, 2022, was India’s first trade agreement with a developed country in over a decade. This agreement has not only reduced tariffs on a wide range of goods but also laid the foundation for broader cooperation in services, investments, and supply chains.
As the agreement marks its third year, it is evident that the India-Australia economic corridor has entered a dynamic phase, backed by strong policy initiatives, institutional frameworks, and shared strategic interests.
Over the past five years, both countries have catalysed robust trade growth. Bilateral trade surged to USD 24.2 billion in FY 2024-24, reflecting the effectiveness in facilitating greater market access and reducing trade barriers.
Indian industries have notably expanded their footprint in Australia in sectors such as textiles, pharmaceuticals, electrical machinery, and agriculture. At the same time, Australian exports to India, led by coal, gold, alumina, and LNG, have played a crucial role in powering India’s industrial base. The agreement also introduced new product lines in trade, such as calcined petroleum coke and high-capacity diesel generators, which have helped diversify bilateral relations.
The trajectory of India-Australia trade over the last decade underscores a maturing economic relationship. From a modest base of approximately USD 15 billion in 2016, trade volumes have risen significantly, particularly following the implementation of the ECTA.
Despite a brief contraction in FY 2020-21 due to the pandemic, trade rebounded sharply in FY 2021-22, reaching a total of USD 25 billion. FY 2022-23 witnessed the highest trade volume at USD 25.9 billion, before stabilising at USD 24.0 billion in FY 2023-24 and 24.2 billion in 2024-25.
A closer look at the commodity structure of bilateral trade reveals the complementary nature of India-Australia economic exchanges. India exports refined petroleum products, pharmaceuticals, textiles, engineering goods, and agricultural commodities to Australia. In recent years, high-growth items have included railway passenger cars, packaged medications, and synthetic textiles.
The ECTA has also facilitated new export lines such as calcined petroleum coke and liquefaction-based industrial machinery. These goods have found a receptive market in Australia, reflecting India’s increasing capability in value-added manufacturing.
Conversely, India’s imports from Australia are dominated by raw materials and energy resources. Coal briquettes have consistently topped the list, with imports exceeding USD 12 billion in pre-COVID years. Other key imports from Australia include gold, liquefied natural gas, alumina, lentils, and wool. Australia’s agribusiness sector has also benefited from tariff reductions under ECTA, allowing greater access for sheep meat, lobster, and cotton in the Indian market. This trade composition demonstrates a strategic fit, with India leveraging Australia’s resource base to fuel its industrialisation while exporting finished goods and pharmaceuticals.
Beyond trade in goods, India and Australia are strengthening investment ties. As of December 2024, Australia’s cumulative Foreign Direct Investment (FDI) into India was around USD 1.52 billion. These investments are growing in key sectors such as mining, renewable energy, education, and agribusiness. Australian firms are exploring opportunities in India’s energy transition journey, particularly in the solar and green hydrogen sectors.
India, in turn, has steadily increased its investment presence in Australia. Indian firms in IT, pharmaceuticals, and manufacturing have established operations, benefiting from Australia’s skilled workforce and strategic location in the Indo-Pacific region.
Institutional mechanisms like the Joint Ministerial Commission and the Australia-India Business Exchange have facilitated regular dialogue and eased regulatory bottlenecks. Australia’s MATES (Mobility Arrangement for Talented Early-professionals Scheme) and India’s Gati Shakti and Production-Linked Incentive (PLI) schemes have further opened avenues for bilateral investments. The broader objective is to foster two-way capital flows and joint ventures, especially in clean energy technologies, advanced manufacturing, and vocational education.
India and Australia hold the potential to double trade every five years.
Looking ahead, the future of India-Australia trade appears promising, anchored in shared economic goals and strategic alignment. Negotiations toward a Comprehensive Economic Cooperation Agreement (CECA) are underway, aiming to expand the ECTA’s scope to include deeper commitments in services, investment protections, and dispute resolution. The envisioned CECA could potentially double bilateral trade to USD 50 billion in the coming years (2029-30) and eventually reach USD 100 billion. Key focus areas include green hydrogen, critical minerals, defined manufacturing, agribusiness, and digital trade.
India’s rise as a global manufacturing hub under the Make in India initiative aligns with Australia’s interest in diversifying its trade partnerships. Australia’s expertise in mining and education complements India’s resource needs and demographic dividend. The two nations are also collaborating under the Supply Chain Resilience Initiative (SCRI), promoting secure and diversified supply chains in the Indo-Pacific region. Mobility partnerships for students and professionals, as well as digital cooperation, are expected to play a growing role in cementing economic ties.
In conclusion, the India-Australia economic partnership has moved beyond transactional trade to a broader strategic engagement. The ECTA has acted as a catalyst in accelerating trade, opening new sectors, and enhancing mutual market access. The road ahead will depend on the timely conclusion of the CECA, scaling up cooperation in future-oriented sectors, and strengthening institutional and people-to-people linkages. With political will, policy support, and private sector enthusiasm, India and Australia are well on their way to becoming comprehensive economic partners in the coming times.
