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The interim free trade agreement (FTA) between India and Australia comes into force today (29 December).

The FTA is expected to boost the bilateral trade and commerce between the two countries from existing $31 billion to $45-50 billion in five years.

The free trade pact, known as India-Australia Economic Cooperation and Trade Agreement (IndAus ECTA), was signed on 2 April this year and ratified by the Australian Parliament on 22 November.

The agreement encompasses cooperation across the entire gamut of bilateral economic and commercial relations between the two countries.

It covers areas like Trade in Goods, Rules of Origin, Trade in Services, Technical Barriers to Trade (TBT), Sanitary and Phytosanitary (SPS) measures, Dispute Settlement, Movement of Natural Persons, Telecom, Customs Procedures, Pharmaceutical products, and Cooperation in other Areas.

Under the pact, India will benefit from preferential market access provided by Australia on 100 per cent of its tariff lines. This includes all the labour-intensive sectors of export interest to India such as gems and jewellery, textiles, leather, footwear, furniture, food, and agricultural products, engineering products, medical devices, and automobiles.

On the other hand, India will offer preferential access to Australia on over 70 per cent of its tariff lines, including lines of export interest to Australia which are primarily raw materials and intermediaries such as coal, mineral ores and wines etc.

As regards trade in services, Australia has offered wide ranging commitments in around 135 sub sectors and Most Favoured Nation (MFN) in 120 sub sectors which cover key areas of India’s interest like IT, ITES, Business services, Health, Education, and Audio visual.

Some of the key offers from Australia in the services space include: quota for chefs and yoga teachers, post study work visa of 2-4 years for Indian students on reciprocal basis, mutual recognition of professional services and other licensed/regulated occcupations; and work and holiday visa arrangement for young professionals.

On the other hand, India has offered market access to Australia in around 103 sub-sectors and Most Favoured Nation in 31 sub-sectors from the 11 broad service sectors such as ‘business services’, ‘communication services’, ‘construction and related engineering services’ etc.