India-Aus trade: Zero-duty access to boost exports from 2026 says report

Zero-duty access for all Indian exports to Australia from Jan 1, 2026, could boost shipments, says a Rubix report. India's trade deficit with Australia has halved, but this is due to falling imports rather than strong export growth.

Zero-duty access for all Indian exports to Australia from January 1, 2026, could help lift shipments and shift the bilateral trade relationship more in India's favour, after the country's trade deficit narrowed largely because of falling imports rather than strong export growth, according to a Rubix Data Sciences report.

"All Indian exports being eligible for zero-duty market access into Australia from 1 January 2026 is expected to significantly enhance India's export competitiveness by eliminating remaining tariff barriers and expanding price advantages across the entire export basket in the Australian market," the Rubix Country Insights report said.

ECTA Benefits and Trade Deficit Status

The report said the full benefit of the India-Australia Economic Cooperation and Trade Agreement, or ECTA, could now begin to translate into stronger Indian exports to Australia. Australia had offered tariff concessions across all tariff lines for Indian exports. Of these, 98.3 per cent became duty-free immediately, while tariffs on the remaining products were phased out. From January 1, 2026, all Indian exports became eligible for zero-tariff access to the Australian market.

The development comes as India's trade deficit with Australia has already more than halved to USD 6.5 billion in FY2026 from USD 12.1 billion in FY2023. However, the report cautioned that the improvement was not driven by a broad-based increase in India's exports.

"While export growth has remained modest, a steady decline in imports has more than halved India's trade deficit with Australia, an improvement on the import side rather than a broad-based trade gain," it said.

Trade Figures and Dynamics

India's imports from Australia fell from USD 19 billion in FY2023 to USD 13.8 billion in FY2026, recording a decline of about 10 per cent annually. In contrast, India's exports to Australia increased only marginally from USD 7 billion to USD 7.3 billion during the period, growing at a compound annual rate of 1.6 per cent.

Overall bilateral goods trade declined from USD 26 billion to USD 21.1 billion. The numbers indicate that India reduced its trade gap mainly by purchasing fewer Australian goods, rather than by significantly increasing exports. The extension of zero-duty access across the entire Indian export basket could now provide the price advantage needed to accelerate shipments and produce a more export-led improvement in the trade balance.

Shift in Export and Import Composition

Refined petroleum products remained India's largest export to Australia, accounting for 37 per cent of shipments in FY2026. Their share, however, declined from 42 per cent in FY2023, while pharmaceuticals, gold jewellery, industrial machinery and passenger vehicles gained share.

On the import side, coal continued to dominate India's purchases from Australia, although its share fell sharply from 77 per cent in FY2023 to 45 per cent in FY2026. Imports of gold, copper ores, dried pulses and raw cotton increased during the period.

The ECTA, signed in April 2022, completed four years in April 2026 and has improved market access while reducing tariff barriers between the two countries. (ANI)

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