India’s trade relationship with Australia has entered a rare phase in global commerce: as of January 1, 2026, every Indian good entering Australia faces zero tariff. This milestone, achieved three years after the Australia-India Economic Cooperation and Trade Agreement (ECTA) came into force, signals not just preferential trade but complete market access to a nearly $2-trillion Australian economy—at a time when global trade is becoming more fragmented and protectionist.
How the zero-tariff milestone was reached
The Australia–India ECTA, which entered into force in December 2022, was designed as an “early harvest” trade agreement, with a roadmap for deeper integration. Australia committed to eliminating tariffs on Indian goods in phases, and that transition is now complete. In return, India reduced or eliminated duties on a wide range of Australian exports, especially raw materials and intermediate goods crucial for domestic manufacturing.
This makes Australia one of the few major economies where Indian exporters now enjoy across-the-board duty-free access.
Trade numbers that signal a structural shift
The impact of ECTA is visible in trade data. Bilateral trade has crossed 50 billion Australian dollars (around Rs 3 lakh crore) for the first time, with two-way goods trade doubling over the past five years. What stands out is the asymmetry in growth:
- India’s global goods exports grew about 40% in five years.
- India’s goods exports to Australia grew about 200% in the same period.
This suggests Australia has become one of India’s fastest-growing export destinations, outperforming India’s average global trade expansion by a wide margin.
Why the two economies fit naturally
The strength of the partnership lies in economic complementarity rather than competition. Australia supplies what India critically needs—coal, critical minerals, rare earths, and skills linked to advanced mining and resource management. These inputs support India’s manufacturing push under “Make in India”.
India, in turn, exports finished manufactures, automobiles, garments, pharmaceuticals, and agricultural products that are increasingly mainstream in Australian markets. Indian brands and products are now visible well beyond the Indian diaspora, which itself has crossed one million people in Australia.
Employment and growth implications
Trade under ECTA is not just about volumes but jobs. In Australia, roughly one in four jobs is linked to trade, and a significant number are now connected to exports to India. In India, the agreement has been projected to create up to one million jobs, driven by export growth, logistics, and downstream manufacturing.
Such employment effects matter politically and economically, especially as both countries look to diversify supply chains away from overdependence on a few global hubs.
Strategic value in an uncertain global trade order
The timing of this deepening trade relationship is crucial. With geopolitical tensions, sanctions, and trade wars reshaping global commerce, India and Australia are positioning themselves as reliable partners in the Indo-Pacific. Australian policymakers increasingly view India as central to their long-term economic engagement strategy, while India sees Australia as a stable supplier of resources critical to energy transition and industrial growth.
The push towards a broader CECA
Building on ECTA’s success, both sides are now working to upgrade it into a Comprehensive Economic Cooperation Agreement (CECA). Unlike ECTA, CECA aims to cover services, investment, digital trade, education, and deeper cooperation in critical minerals supply chains. Political signals from both governments indicate an intent to conclude negotiations at the earliest.
What to note for Prelims?
- Australia–India Economic Cooperation and Trade Agreement (ECTA) provides zero-tariff access for Indian goods to Australia.
- Bilateral trade has crossed AUD 50 billion.
- ECTA is being upgraded into a Comprehensive Economic Cooperation Agreement (CECA).
What to note for Mains?
- Role of trade agreements in supply chain diversification.
- India–Australia economic complementarity in critical minerals and manufacturing.
- Significance of Indo-Pacific trade partnerships amid global protectionism.
- Employment and industrial implications of zero-tariff market access.
