Auckland, New Zealand
Indo-Pacific Strategy Gains Traction, but Risks Persist
Pacts Project $40B Trade Gains Amid Delays
Melbourne/Auckland: Joint studies and industry estimates project the India–Australia Comprehensive Economic Cooperation Agreement (CECA) could increase bilateral trade by 30 to 50 per cent over a decade, potentially adding $10 billion to $15 billion annually, while the India–New Zealand Free Trade Agreement (FTA) might expand exchanges up to tenfold to around $13 billion by 2035. These aspirations serve as buffers against supply-chain vulnerabilities and overreliance on China, but they depend on resolving persistent divides, as shown by Commerce and Industry Minister Piyush Goyal’s meetings on November 8, 2025, in Melbourne and Auckland. Australia’s post-election clarity and New Zealand’s tariff gaps highlight India’s need to diversify amid U.S. tariff pressures and China’s slowdown, though domestic protections slow progress.
In Melbourne, Goyal met Trade and Tourism Minister Don Farrell and Skills and Training Minister Andrew Giles to evaluate progress on advancing the India–Australia Economic Cooperation and Trade Agreement (ECTA), effective December 29, 2022, toward CECA. The ministry described the review as constructive, covering goods, services, investment, and joint initiatives. Merchandise trade reached $24.1 billion in fiscal 2024–25, with Indian exports up 8 per cent after a 14 per cent rise the previous year. Goyal joined Farrell and Giles for a session with diaspora business leaders to address market barriers, framing the 800,000 Indian-origin residents as key to deeper integration.
ECTA’s tariff structure provides a tested foundation. It granted immediate duty-free access for over 85 per cent of Australian goods to India by value, covering $12.6 billion in pre-ECTA dutiable trade, and 96 per cent of Indian goods from Australia. Coal, liquefied natural gas, pharmaceuticals, medical devices, seafood, wool, and sheep meat dropped from 5–10 per cent to zero at entry. Premium wine over US$5 per 750ml bottle fell from 150 per cent to 100 per cent initially, then by 5 percentage points annually to 50 per cent over 10 years, with most-favoured-nation protections. Lentils, almonds, and fruits phase down from 30–60 per cent over two to six years, while dairy, beef, and wheat remain excluded to protect Indian agriculture. Indian textiles, apparel, leather, gems, jewellery, and engineering goods, previously at 5 per cent Australian duties, gained zero rates on 99 per cent of lines, plus faster approvals for pharmaceuticals and IT hardware, and tax relief. Eligibility requires 40 per cent regional value content or transformation, verified by certificates. Australian utilisation stands at 70 per cent, targeting 90 per cent duty-free by January 2026.
Implementation drove merchandise trade to double from $12.2 billion in FY 2020–21 to $26 billion in FY 2022–23. India’s exports to Australia rose 14 per cent to $7.94 billion in FY 2023–24, reducing the deficit from $12 billion to $8.2 billion. Trade from April to November 2024 reached $16.3 billion, with November exports up 64.4 per cent year-on-year to $643.7 million, driven by calcined petroleum coke and diesel generators. Full-year volumes settled at $24.1–$24.2 billion, with Australia as India’s 14th-largest partner. Utilisation reached 79 per cent for exports and 84 per cent for imports by late 2024, per preferential data exchanges, showing efficiency but room to match ASEAN FTAs’ 90 per cent. Excluding coal, Australian non-energy exports to India rose 95 per cent from 2022 to 2024, agriculture 146 per cent, and industrials 84 per cent. Indian imports grew 32 per cent overall, 35 per cent in agriculture, 30 per cent in non-diesel industrials. DFAT’s 2025 brief credits ECTA for post-COVID recovery, though April–September 2024 saw 18 per cent drops in both directions due to commodity weakness.
Sectoral gains show targeted complementarity. India’s textiles, chemicals, agriculture, pharmaceuticals, electronics, and engineering sectors surged, with textiles up 15 per cent after launch and new entries like diamond-studded gold and turbojets diversifying output. Labour-intensive sectors such as apparel, leather, and footwear target over $500 million in agri-food exports through processed and ethnic lines. Engineering exports hit $320 million in 2024, including pumps and auto parts, and are projected to reach $600–700 million with quality upgrades. Pharmaceuticals and IT hardware save up to $1 billion via tax changes. Electronics reached $65 million in smartphones and components. Australia dominates in resources, with tariff-free lithium and rare earths supporting India’s green transition, comprising 60 per cent of 2024 flows. Salmon duties fell from 30 per cent to 12.9 per cent, reaching zero by 2028. Machinery for mining and railways gained up to 10 per cent cuts. Services, 70 per cent of Australia’s GDP, access 85 Indian subsectors, with 74 per cent equity in internet firms and annexes for finance and telecom. Education exports hit $9 billion in 2024, with 145,390 Indian students, 16 per cent of total international enrollments, aided by four-year post-study visas for PhDs. Critical minerals give Australia an edge over China in India’s EV and solar supply chains.
Macro benefits build resilience. DFAT projects $14.8 billion in annual trade addition after full phase-in, with Australia saving $2 billion yearly in tariffs and $310 million on imports since 2022. India gains cheaper inputs like cotton and ores for manufacturing, potentially adding 0.2–0.5 per cent to GDP and 1 million jobs, per FICCI estimates. It reduces reliance on China’s $100 billion trade volume, aligning with Quad, IPEF, and SCRI. Australia diversifies from China’s 60 per cent hold on its ore exports, tapping India’s 1.4 billion consumers, its third-largest services market. Challenges remain, including an $8 billion deficit in FY 2024–25. Exclusions limit agricultural upside, and biosecurity blocks mangoes and spices. Utilisation at 79 per cent signals SME awareness gaps. Mode 4 mobility limits Indian professionals despite Australian shortages. At end-2024, Australia’s investment stock in India was $27.6 billion, and India’s in Australia was $50.6 billion, per DFAT, but ECTA’s services focus delays protections, curbing flows. Geopolitically, ECTA strengthens India’s FTA portfolio, including UAE CEPA and UK CETA, targeting AUD 100 billion by 2030, though India-EFTA TEPA in 2024 and EU talks reduce its lead. Amid mid-2025 U.S. tariff measures, it bolsters Indo-Pacific chains for renewables and pharma, but questions persist on equitable gains for MSMEs and farmers versus resource-manufacturing imbalances.
ECTA shows a positive balance, with 79–84 per cent utilisation and 14 per cent export growth, but hurdles temper optimism. SME procedures lag, and coal fell 10–15 per cent with India’s energy shift. Biosecurity and sanitary frictions continue, with farm groups on both sides raising concerns. As CECA resumes after its 11th round in August 2024, ECTA’s exclusions and phasing must adapt for ISDS, procurement, and sustainability to avoid losing ground to CPTPP or UK pacts. ECTA models calibrated integration, a $24 billion engine projecting $14.8 billion in flows, synergies, and buffers. Its dividend depends on fair expansion. Stakeholders need awareness drives and audits to lift 70 per cent utilisation to 90 per cent, ensuring gains reach beyond headlines for Indo-Pacific durability. As volumes stabilise after the surge, its legacy hinges on evolving from a tariff bridge to a comprehensive anchor in a fragmented global landscape.
CECA’s advance reveals divides. Australia’s Labour government, reelected in May 2025 under Anthony Albanese, delayed agricultural concessions, with dairy and horticulture groups criticising India’s sanitary rules as protectionist. Mode 4 mobility for Indian IT and health professionals conflicts with labour shortages. India’s 2023 Digital Personal Data Protection Act disrupts digital trade alignment. Procurement reciprocity and investor-state dispute settlement echo 2016 deadlocks, with “Make in India” resisting Australia’s $500 billion tender access. Biosecurity delays on mangoes and IP tensions over generics add to a $20 billion Indian goods deficit in 2023, prompting equity demands amid Quad pressure to diversify from China’s 60 per cent hold on Australian ore exports. An initial late-2024 close is now projected for mid-2026, per DFAT, risking $20 billion in lost FDI as the UK-Australia pact draws investment.
Pressure builds. Mid-2025 U.S. tariff measures, with Indian exports down 37.5 per cent from May to September, drive India’s pivot, mirroring ECTA’s 15 per cent textile gain for renewables and pharma resilience, potentially adding 0.2–0.5 per cent to GDP if sealed. Stalemate locks in disparities, yielding to ASEAN’s balanced terms, where India records $41 billion in exports against $80 billion in imports. Geopolitically, the pacts elevate India’s role in Quad, IPEF, and SCRI against China’s Indo-Pacific assertiveness, enabling diversification from Beijing’s 60 per cent grip on Australian exports. With U.S.-China easing at APEC 2025, including fentanyl duties to 10 per cent and reopened hotlines, New Delhi hedges against weakening Quad cohesion, where Washington prioritises bilaterals. This prompts a border thaw with Beijing, easing Galwan-era investment scrutiny, while strengthening Quad supply chains for minerals and renewables to avoid losing leverage in a Trump-Xi détente. Australia’s Albanese reelection clears election uncertainty for defence coordination, with Talisman Sabre 2025 drills signalling a shift in countering China. Risks remain. A U.S.-India trade impasse, with a 37.5 per cent export fall, may push multipolarity, including BRICS and Russia energy ties, straining Quad unity and exposing Australia to China coercion like the 2020 coal bans. A mid-2026 CECA delay forfeits $20 billion in FDI and blunts first-mover advantage against CPTPP in a multipolar Indo-Pacific, where India’s strategic autonomy navigates Trump’s transactionalism without alienating Beijing.
Across the Tasman, Goyal and Trade Minister Todd McClay expressed cautious optimism as the fourth FTA round ended after five days examining goods, services, economic ties, and origin rules. Goods trade topped $1.3 billion in 2024–25, up 49 per cent year-on-year, with the pact set to boost agriculture, food processing, renewables, pharmaceuticals, education, and services, especially Fonterra’s dairy quotas. Relaunched on March 16, 2025, after a decade’s pause, the talks, now targeting year-end closure, address New Zealand’s 2.3 per cent baseline tariffs against India’s higher rates, requiring alignment on sanitary standards and digital flows where horticulture access and skilled migration clash with local priorities.
Challenges mirror CECA. Tariff gaps risk flooding Indian dairy markets, echoing ECTA exclusions, while origin verification burdens SMEs in a volatile environment. A timely deal could double New Zealand dairy and kiwifruit exports, adding $1–2 billion, strengthening India’s $1 billion base from April to January 2025, and Quad-adjacent security, though delays invite CPTPP bypass. For India, a 2025 close aligns with UAE CEPA and UK CETA, enhancing diversification against mid-2025 U.S. tariffs, but asymmetry could widen deficits, per Reuters. Geopolitically, the FTA reflects New Zealand’s balancing act, hedging AUKUS ties with China-dependent trade at 28 per cent of exports, while elevating India as its fastest-growing partner to reduce Beijing’s leverage, as seen in 2020 dairy disputes. U.S.-China APEC 2025 easing counters a perceived U.S. retreat from the Indo-Pacific, supported by Luxon-Modi defence MoUs and security dialogues. Third-party pressures include U.S.-NZ climate-trade pacts amplifying dairy demands, similar to IPEF, while China’s 30 per cent export dominance tests India as a diversification option, with diaspora and RCEP sensitivities if Luxon’s 60-day deadlines slip. A year-end deal unlocks $1.4 trillion in Indian infrastructure synergies in urban development and green energy, reshaping Pacific dynamics. New Zealand-India ties, rebuilt after the 1998 nuclear chill, bolster supply-chain security against Beijing’s grey-zone tactics, even as Trump’s transactionalism risks sidelining Quad peripheries like Wellington in a multipolar landscape.
Inter-sessional work now addresses these gaps, with Goyal’s dual diplomacy, backed by diaspora influence, signalling commitment. Yet after 11 CECA rounds and four FTA sessions, rhetoric outweighs drafts. Post-election momentum and Luxon-Modi alignment could deliver balanced pacts, or agricultural, data, and legacy sensitivities could stall $40 billion in potential gains. In a fragmented global order, India’s Indo-Pacific strategy requires not just momentum but calibrated convergence to secure lasting resilience.
– global bihari bureau
