AI-ECTA Explained – What the Australia-India Trade Agreement Means for Business

In December 2022, Australia and India activated the Economic Cooperation and Trade Agreement (AI-ECTA) – the first preferential trade agreement between the two nations. For businesses on both sides of the corridor, it represents a structural shift in the economics of bilateral trade. Yet three years after entry into force, tariff utilisation rates sit at 84% for Australian exports entering India and 86% for Indian exports entering Australia (PIB India, September 2025) – meaning significant commercial value is still being left on the table.

What the Agreement Covers

AI-ECTA is an interim, goods-focused agreement. Its headline provisions:

• For Australian exporters to India: More than 85% of Australian goods now enter India at zero or reduced duty (from Day 1); coverage rises to 90% from January 2026.
• For Indian exporters to Australia: 100% of Indian goods now enter Australia tariff-free (as of January 2026; 96% from Day 1).
• Rules of Origin: Goods must meet “substantial transformation” criteria or percentage-of-value thresholds to qualify for preferential treatment.
• Services: Limited professional services mobility provisions. More comprehensive services coverage is being negotiated in the full CECA.
• Investment: Basic investment protections; more detailed investment chapter expected in the CECA upgrade.

Which Sectors Benefit Most

Australian goods with the greatest tariff advantage in India: resources (coal, LNG, iron ore), agriculture (wheat, barley, lentils, wool, cotton), and manufactured goods including machinery, equipment, and automotive components.

For Indian exporters to Australia: textiles, garments, leather goods, manufactured components, sports equipment, and processed foods – all categories where Indian exporters have established global competitiveness.

How to Use AI-ECTA in Practice

If your product is eligible for preferential treatment, you need to:

1. Confirm your HS code and verify that it falls within an AI-ECTA preferential schedule entry
2. Obtain a Certificate of Origin from your relevant chamber of commerce or industry body
3. Declare the ECTA preference on your customs entry documentation
4. Ensure Rules of Origin compliance – this is the step most businesses miss

What CECA Will Add

The full Comprehensive Economic Cooperation Agreement (CECA) is currently under negotiation, with 11 formal rounds completed as of August 2025 (PIB). Expected additions include deeper services liberalisation, investment protections, and digital trade provisions.

Sources: DFAT (dfat.gov.au); PIB India (pib.gov.in); ADB ARIC database