Local businesses celebrate the new interim free trade agreement between Australia and India

Business groups have welcomed the development of an interim free trade agreement between Australia and India, an economic commitment that promises to lower tariffs and make it easier for skilled professionals to live and work in every country.

On Saturday, Prime Minister Scott Morrison and Trade Minister Dan Tehan announced the signing of the Australia-India Economic and Trade Cooperation Agreement (AI-ECTA), a pact designed to strengthen ties between the two nations.

The deal will initially reduce tariffs on 85% of Australian exports, worth $12.6 billion a year, Morrison and Tehan said. The program will run for a decade, eventually reducing tariffs on about 91% of exports, worth $13.4 billion.

Beyond the benefits for Australian exporters, the program also promises to benefit the professional services sector.

The agreement will “facilitate the recognition of professional qualifications, licensing and registration procedures between professional services organizations of the two countries”, according to a government statement.

AI-ECTA comes at a time when significant talent shortages are limiting Australian industries, including accounting and engineering fields, both of which are flagged in the government statement.

“Increased labor mobility and reduced barriers to the services sector will help create and strengthen the industries Australia needs for the future, including professional services, the digital economy, education, energy and resources,” said Business Council chief executive Jennifer Westacott.

The agreement will also allow Australian companies to “benefit from diversified global supply chains” and “gives Australian exporters preferential access to a market of nearly 1.5 billion customers”. Australian Chamber of Commerce and Industry Chief Executive Andrew McKellar said Saturday.

AI-ECTA serves as a stepping stone to a comprehensive economic cooperation agreement, Morrison and Tehan said.