India's Engineering Goods, Textiles, Pharma Exports Jump After Australia Trade Pact

As the India-Australia Economic Cooperation and Trade Agreement completes a year, India reported a 17.8% rise in exports along preferential lines between April and October, reaching $1.58 billion.

A 'preferential line' refers to a certain commodity or service that two participating countries in a trade deal agree on for mutual benefit, often a lower duty tariff in this case.

The India-Australia trade deal was completed with careful consideration of comparative advantages, and the industry too has been leveraging it, Rajesh Agarwal, additional secretary with the Commerce Ministry, said on Friday. There are early signs of export growth in the areas where preferential tariff rates were agreed upon, he said.

India's regular exports to Australia rose to $5.87 billion, exhibiting 14% growth from April to November 2023, as compared with the corresponding period last year.

Imports were reduced by 19% to $11.14 billion in the same period, resulting in a lower trade balance between the two countries of $5.2 billion from $8.6 billion.

Of the sector-wise exports to Australia along preferential lines, engineering goods saw the highest quantum of increase, from $0.61 billion between April and October 2022 to $0.75 billion in April and October 2023, rising 24% after a trade deal between the two countries.

Drawing a similar YoY comparison, exports of ready-made garments of all textiles increased from $0.16 billion (April–October 2022) to $0.2 billion in the first seven months of fiscal 2024, showing a rise of 27%.

The highest percentage of gains was observed in the drugs and pharma products sector, which grew 52%, albeit on a small base of $0.01 billion ($10 million).

India's imports along preferential lines increased for pulses and fruits and vegetables, rising to $0.32 billion (a 136% increase YoY) and $0.08 billion ($80 million), respectively, in the first seven months of FY24.

The India-Australia Economic Cooperation and Trade Agreement has been completed for one year since its commencement on Dec. 29. The two countries are looking to further expand their existing pact into an ambitious Comprehensive Economic Cooperation Agreement, where they hope to cover new ground.

"Talks to expand the existing trade pact with Australia are progressing well. We expect to have some negotiations on rules of origin in January 2024. Have to work out detailed product-specific rules, so that takes time. It should be done sooner than later," Agarwal said.