Australia to scrap tariffs on all Indian exports from January 1, 2026: Piyush Goyal

The recent announcement by Union Minister Piyush Goyal that Australia will eliminate tariffs on all Indian exports starting January 1, 2026, marks a significant milestone in India-Australia bilateral relations and India's trade policy. This move is a direct consequence of the India-Australia Economic Cooperation & Trade Agreement (ECTA), which came into force on December 29, 2022. The ECTA was a pivotal step, with Australia offering duty-free access to 100% of its tariff lines for Indian goods, while India provided preferential access to over 85% of its tariff lines for Australian goods. This phased elimination of tariffs, now culminating in full duty-free access for Indian exports, signals a deepening of economic partnership between the two nations.

Historically, economic ties between India and Australia have seen an upward trajectory, driven by shared democratic values, strategic convergence in the Indo-Pacific region, and complementary economies. The ECTA was conceptualized against a backdrop of global trade uncertainties and the need for both countries to diversify their supply chains and strengthen economic resilience. India's decision not to join the Regional Comprehensive Economic Partnership (RCEP) in 2019 further underscored its focus on bilateral trade agreements that align with its national interests and protect sensitive domestic sectors. The ECTA, therefore, represented a strategic pivot for India, seeking to leverage its growing economic prowess and market size.

Key stakeholders in this development include the governments of India and Australia, particularly India's Ministry of Commerce and Industry and Australia's Department of Foreign Affairs and Trade. Beyond the official machinery, the primary beneficiaries and drivers are the diverse range of Indian exporters. Sectors like textiles, apparel, leather, footwear, gems and jewellery, engineering goods, and pharmaceuticals stand to gain immensely. These are predominantly labor-intensive industries, meaning increased exports will directly translate into job creation and economic upliftment, particularly in semi-urban and rural areas. Australian importers and consumers will also benefit from a wider array of competitively priced Indian goods. Furthermore, international bodies like the World Trade Organization (WTO) provide the overarching framework for such agreements, ensuring adherence to global trade rules.

The significance for India is multi-faceted. Economically, the complete removal of tariffs provides Indian products with a competitive edge in the Australian market, potentially boosting export volumes significantly. The reported 8% growth in India's exports to Australia in 2024-25, even before the full tariff elimination, serves as a strong indicator of ECTA's initial success and the potential for future expansion. This aligns perfectly with India's 'Make in India' and 'Atmanirbhar Bharat' initiatives, promoting domestic manufacturing and export-led growth. Politically, the agreement solidifies India's 'Act East' policy and strengthens its strategic partnership with a key Quad member, contributing to regional stability and economic integration in the Indo-Pacific. Socially, the boost to labor-intensive sectors can lead to improved livelihoods and poverty reduction.

From a constitutional perspective, international agreements like ECTA are facilitated by the Indian government under its executive powers, but their implementation often requires legislative action. Article 253 of the Indian Constitution grants Parliament the power to make any law for implementing any treaty, agreement, or convention with any other country or any decision made at any international conference, association, or other body. This article provides the legal basis for domestic legislation to give effect to international trade commitments. The Foreign Trade (Development and Regulation) Act, 1992, and the annually updated Foreign Trade Policy also govern India's approach to international trade and the implementation of such agreements.

The future implications are substantial. This full tariff elimination is expected to pave the way for a more ambitious Comprehensive Economic Cooperation Agreement (CECA) between India and Australia, which would expand cooperation beyond goods to services, investment, and other areas. Increased bilateral trade will enhance supply chain resilience, a critical lesson from recent global disruptions. It also positions India as a reliable trading partner in the Indo-Pacific, potentially attracting more foreign direct investment (FDI) into export-oriented sectors. The success of ECTA could also serve as a template for India's negotiations with other major economies, such as the ongoing Free Trade Agreement talks with the UK and the European Union, demonstrating India's commitment to open and fair trade while safeguarding its national interests.