India, Australia set to finalize mini FTA
Live Mint - 11 February 2022
India, Australia set to finalize mini FTA
By Dilasha Seth, Ravi Dutta Mishra
India and Australia will be finalizing a mini free trade agreement (FTA) in the next 30 days, Union minister Piyush Goyal said in a post ministerial meeting address in New Delhi on Thursday. The limited trade deal called the “early harvest agreement’, is expected to cover a wide range of sectors including textiles, pharma, health, education, renewables, and gems and jewellery, said Goyal after the first day of talks with his Australian counterpart Dan Tehan.
“That’s the kind of aggressive timelines we have set for our teams today. I am quite confident that we will come up with some exciting news for the businesses in both countries," said Goyal in his address. He added that it will be the fastest FTA signed by either India or Australia so far.
However, the remaining issues would get covered in the final agreement, which the two sides hope to finalize over 12-18 months once the early harvest comes into operation.
“The 30 days of hard work could lead to something that is truly historic," said Tehan.
He pointed out that 75% of Australia’s trade is now covered by FTAs, which could go up to 90% after the trade pact with India. The FTA negotiations come against the backdrop of bilateral trade growing by 120% in April-December 2021 compared with the same period of the previous year.
The growth was in line with the supply chain resilience initiative launched earlier this fiscal to counter China’s dominance in the supply chain in the Indo-Pacific region.
Trade experts also attributed the sharp increase to increased industry awareness and interest in anticipation of a trade pact, especially for Indian textiles, leather, footwear, and gems and jewellery.
Australia wants a phased tariffs reduction for its wines, while India is seeking greater market access for its textiles, footwear, leather, and pharmaceuticals and easier entry for its professionals.
India and Australia are working towards a mutually beneficial agreement Goyal said. The minister said he had “comprehensive talks over lunch" with Tehan.
India may be willing to lower tariffs on Australian wines above a certain monetary threshold, as this will not affect the low-cost Indian wine industry, persons aware of the matter said. India is also learnt to have proposed a lower tariff on bulk imports of wine. However, Australia seems to be wary of the available infrastructure to support bulk imports. India has a 150% tariff for alcoholic beverages. Australia is the sixth largest wine producer and the fourth largest wine exporter in the world. The Indian market is nascent but growing.
“The core of the issue from the Australian side is access... it has benefited in its earlier trade agreements including that with China. Around 60% of wine produced in Australia is exported, hence it needs market access for it," said Arpita Mukherjee, professor, ICRIER. Australia’s demand for lower tariff on dairy was off the table from the ‘early harvest’ deal because of sensitivities on the Indian side.
