ABC | 4 April 2022
Australia-India Free Trade Agreement cheered by wine exporters and sheep farmers, but dairy and grain miss out
By Jane McNaughton and rural reporters
A new interim Free Trade Agreement (FTA) between Australia and India designed to reduce Australia’s economic dependence on China has opened significant market opportunities for some industries, but others have been shut out.
Australian wine exporters and sheep farmers are among those who will see tariffs significantly reduced.
But the dairy and grain industries are calling for better deals, claiming the agreement is a major lost opportunity for market expansion.
Australian wine producers were left with a giant hole in the export market in 2020 when the Chinese government announced it would place tariffs of up to 200 per cent on all Australian wine.
Australian Grape and Wine chief executive Tony Battaglene said the new deal with India would not recover all the losses, but was a vital step towards addressing the national oversupply of wine.
"The agreement is beneficial for very high-value wine producers, many of which are small and medium-sized businesses," he said.
"They will now have confidence to explore new opportunities in the Indian market as the staged tariff reductions are implemented.
"The China market was worth $1.2 billion before it was essentially closed a couple of years ago — we know we can’t recover that overnight."
Exports of Australian wines to India increased by 71 per cent by volume and 81 per cent by value in 2021, albeit off a very small base.
Mr Battaglene said the industry was looking to expand into south-east Asia, India and Scandinavia while growing established markets such as the United States, Canada and the United Kingdom.
Australian Grape and Wine has also received a $1,817,000 grant from the federal government to help improve international market access.
There is a five per cent tariff on wool exported to India – which is Australia’s second biggest export market for the product – but that will be reduced to zero later this year under the new FTA.
Endeavour Wool Exports founder Josh Lamb said that was great news for the industry and could help to further diversify markets.
"We certainly need an increase in processing capacity in India to really take advantage of it," he said.
"India’s consumption of wool is still a very long way behind China’s, but this could only help that increase, for sure."
Tasmanian State Wool Manager for Nutrien Stewart Raine said India bought approximately seven per cent of the national clip.
"They range from that superfine type right through to the 28-micron broad wool type — they cover the whole gambit," he said.
"I don’t think we’ve realised that extra capacity or that extra ability of them to underpin our market and add another serious layer of competition."
Lamb and mutton producers will also benefit from the FTA, with exporters saying it has been impossible to send lamb to India because of a 30 per cent tariff.
Fletcher International Exports director Roger Fletcher said until now the focus had been on the five-star, top-quality market, which amounted to about 111 tonnes of sheep meat being exported to India over five years.
"The removal of the tariff will go a long way to providing more certainty for this trade," he said.
"We know there is a market for our produce in India and now we can tap into that.
"I believe the new deal will see exports to India increase every year from here on in.
"The majority of other global sheep meat customers are paying significantly less duty when importing Australian lamb and mutton."
One of the biggest losers in the deal is the dairy sector, which has been completely excluded.
United Dairy Farmers of Victoria President, Paul Mumford, said the industry was "extremely disappointed".
"The problem here is that the Indian government saw our industry as a threat to the social fabric of their own industry," he said.
"India has the largest dairy industry in the world, but it’s mostly made up of farmers with two or four cows.
"There’s a lot of opportunity and more work to be done, though — this is an interim agreement and there is room for our Trade Minister to put dairy back on the table."
The grains sector is also calling for more work to be done to improve its access to the Indian market.
The interim FTA offers some potential benefits for Australian lentils and over time will see benefit for faba beans, canola oil and soybeans.
But GrainGrowers chair Brett Hosking said it was largely "business as usual" for the sector.
"There is a huge missed opportunity for the chickpea market," he said.
"We’ve got a reputation for producing amazing quality chickpeas here in Australia, and India are a country that just love them — it’s a staple part of their diet."
Mr Hosking said India’s domestic chickpea production was strong at the moment, but there had been – and would be again – periods where seasonal conditions could not meet demand.
"India are a northern hemisphere country and we’re in the southern hemisphere," he said.
"So it would create a food security framework by having a partnership with Australia."