Which of the following best reflects the strategic impact of the India–Australia Economic Cooperation and Trade Agreement (ECTA) after three years of implementation?
- (a)ECTA removed all tariffs on Australian farm goods unilaterally.
- (b)ECTA mainly benefitted old sectors like cotton, with little new growth.
- (c)ECTA led to 14% export growth (2022–24) and added new items like Air Liquefaction Machinery.
- (d)ECTA includes mutual defence procurement via an Indo-Pacific charter.
Answer
Why
Correct — C. The Commerce Ministry marked the third anniversary of ECTA's signing on 2 April 2025.
It reported that India's exports to Australia grew 14% in 2023-24 over 2022-23. It named Air Liquefaction Machinery, Calcined Petroleum Coke and High-Capacity Diesel Generating Sets as new export lines → option (c).
Why the others are wrong
- (a)ECTA removed all tariffs on Australian farm goods unilaterally. — Neither 'all' nor 'unilaterally' holds. ECTA is a two-way agreement, and India kept sensitive products such as milk and dairy, wheat and sugar in its exclusion list.
- (b)ECTA mainly benefitted old sectors like cotton, with little new growth. — The ministry's own review says the opposite. It credits ECTA with new export lines such as air liquefaction machinery, and it lists cotton among the raw materials India imports.
- (d)ECTA includes mutual defence procurement via an Indo-Pacific charter. — ECTA is a trade agreement. It covers goods, services, rules of origin, customs, trade remedies and movement of people, with no defence procurement chapter.
Concept
The India–Australia ECTA was signed on 2 April 2022 and came into force on 29 December 2022. It is an interim deal, a step towards a fuller Comprehensive Economic Cooperation Agreement (CECA).
The trade is complementary: Australia sends mainly raw materials, India mainly finished goods.
Australia offered duty elimination on 100% of its tariff lines. India offered zero duty on about 90% of Australia's exports by value: 85.3% at once, with more phased in over 3, 5, 7 and 10 years.
The stem's 'three years' counts from the signing on 2 April 2022. By September 2025 the agreement had been in force for less than three years.
The 14% is growth in India's exports in 2023-24 over 2022-23, which the option writes as 2022–24.
Key facts
- India–Australia ECTA: signed 2 April 2022, in force 29 December 2022.
- India's exports to Australia grew 14% in 2023-24 over 2022-23 (Commerce Ministry, 2 April 2025).
- New export lines named by the ministry include Calcined Petroleum Coke, High-Capacity Diesel Generating Sets and Air Liquefaction Machinery.
- Milk and other dairy products, wheat and sugar are in India's exclusion list under ECTA.
Study next
Common traps
- Choosing the 'removed all tariffs' option because Australia did offer duty elimination on all its lines: India's side kept an exclusion list.
- Counting three years from 29 December 2022, the date of entry into force: the anniversary marked in April 2025 was of the signing.
Here a trade agreement is tested through its reported outcomes: the keyed option carries the ministry's own figures, and the distractors misstate the agreement's scope or results.
Related PYQs
No directly related past PYQ was found.