India-Oz FTA utilisation above 90% in some textiles, engineering goods exports

economictimes.indiatimes.com:

Officials said that the utilisation of the India-Australia Economic Cooperation and Trade Agreement (ECTA) is as high as 90% in around 113 products especially labour intensive items where duties were reduced to nil from 5% under the pact. “90% of the exports of these products to Australia are happening through the FTA (free trade agreement) route,” said an official.

This assumes significance as India’s utilization rate of its FTAs has been historically low due to documentation costs, lack of awareness and strict morphine norms. The Asian Development Bank has pegged the utilisation of India’s trade pacts under 25%, among the lowest in Asia whereas FTA utilization by developed countries averages 70-80%.

The ECTA allows 98% of the Indian exports by value to enter Australia duty free. India’s exports of good items to Australia could see a jump once the two sides ink a mutual recognition agreement.

Think tank GTRI has said that to counter the low utilisation rate of India’s FTAs, Indian firms must also compare the most favoured nation (MFN) duty and trade agreement duties for a product as a company benefits from an agreement only when the customs duty under that pact is lower than the MFN duty. MFN means that a country must charge the same import duty from all countries for a product unlike an FTA where the trade partners give each concessions exclusively.