India-Australia trade pact hits turning point as Australia drops all tariffs from Jan 2026

Indian exporters are set to gain a major competitive edge in the Australian market as 100 per cent of Australia’s tariff lines move to zero duty under the India-Australia Economic Cooperation and Trade Agreement (ECTA) from January 1, 2026. The step marks a crucial milestone in the bilateral trade pact and is expected to significantly boost shipments from labour-intensive sectors at a time when India is actively diversifying its export destinations.

The complete elimination of tariffs is likely to benefit sectors such as textiles, leather, engineering goods, gems and jewellery, and processed food, where even marginal cost reductions can translate into higher volumes. For micro, small and medium enterprises (MSMEs), which often operate on thin margins, lower landed costs in Australia could improve profitability and make Indian products more competitive against global suppliers.

For Australia, the arrangement strengthens access to a stable and trusted sourcing partner, while Indian exporters gain deeper entry into a developed, high-income market with predictable trade rules and strong consumer demand.

Marking the third anniversary of the ECTA, Commerce and Industry Minister Piyush Goyal said the agreement had moved beyond intent to deliver tangible results on the ground. Sharing details on X (formally twitter), Goyal noted that the pact had translated into “sustained export growth, deeper market access, and stronger supply-chain resilience” over the past three years, benefiting Indian exporters, MSMEs, farmers and workers.

According to the minister, multiple sectors have recorded strong gains under the agreement, including manufacturing, chemicals, textiles, plastics and pharmaceuticals. Petroleum products and gems and jewellery have also seen a notable rise in trade. Exports of gems and jewellery alone grew by 16% between April and November 2025, official figures show.

Agricultural exports have emerged as another bright spot. Indian fruits, vegetables, marine products and spices have found a growing market in Australia, with coffee exports registering particularly high growth. To ease compliance and reduce costs for exporters, both countries have signed a Mutual Recognition Arrangement for organic products, allowing smoother trade and cutting down duplicative certification requirements.

India’s exports to Australia grew by 8% in FY2024-25, helping improve India’s overall trade balance with the country, according to official data. Analysts say the move to zero duty from January 2026 could accelerate this momentum, especially as exporters look for alternatives to traditional markets facing higher trade barriers.

The timing is significant. India is increasingly seeking to diversify its export destinations amid strained trade ties with the US, its largest trading partner. Since August 27, 2025, Indian exports to the US have been subject to a 50% tariff, prompting policymakers and businesses to look more actively at markets such as Australia, Europe and parts of the Indo-Pacific.

Goyal said the ECTA continues to anchor India’s economic engagement in the Indo-Pacific even as negotiations progress on a broader Comprehensive Economic Cooperation Agreement (CECA). The pact, he added, aligns with the government’s Make in India initiative and the long-term vision of Viksit Bharat 2047. “Together, India and Australia are building a future of shared prosperity and trusted trade,” the minister said.

Signed in December 2022, the ECTA aims to deepen trade and investment ties between the two countries by progressively eliminating tariffs, simplifying market access and strengthening supply-chain integration. With zero-duty access now in sight, exporters see the next phase as a potential inflection point in India-Australia economic relations.