‘Need to make some adjustments for India-Australia FTA’
The Hindu Business Online, India
‘Need to make some adjustments for India-Australia FTA’
By G. Srinivasan
19 October 2008
Canberra/India-Australia free trade agreement (FTA) offers India “another opportunity to move the economy into greater efficiency by narrowing trade barriers and increasing access by outsiders to Indian economy,” though this entails some initial adjustment costs.
Interacting with a group of Indian journalists on a roundtable discussion as part of the India-Australia FTA study, organised here by the Australian Department of Foreign Affairs and Trade, the Australia-India FTA Study Director, Mr Michael Wood, said “the reality about trade liberalisation is that it delivers net gains to the economy but some adjustments have to be made.”
Freeing Trade
He said Australia had bad policies in the past but went on a liberalisation drive decades ago which helped it to be in the league of developed countries with a sound banking and financial system.
Adjustment to freeing trade, he said, “is a very big issue in India and we are very much conscious on that but very much want to convince that trade liberalisation be purused by the Government of India.”
Stating that Australia had a string of FTAs with countries such as the US, Singapore, Thailand and Chile, Mr Wood said this helped in access to others’ markets duty-free.
“If Indian exporters are selling their products without tariff being applied, you have 4 per cent margin of preferences and Indian exporters are in disadvantageous to that extent,” he said.
Mr Wood said as India grows, it is going to demand immense sources of inputs and energy.
Hence, India might appreciate the advantages and benefits of moving to become a more important global player.
Hence, it would be importing more and exporting more and sourcing its imports from Australia to feed its export production would be highly advantageous.
Support on Agri-biz
He said on sensitive issues like agriculture, Australian agricultural exports could not only provide counter-cyclical supply to the domestic market but importantly as an input to Indian food manufacturers or processing industry for value-addition and lucrative export markets.
He said India loses as much agricultural produce going from farmers to the consumers as Australia production of agri goods. Australian agri-business could bring logistics and cold chain technology, he said.
Ms Judy Barfield, Department of Agriculture, Fisheries and Forestry said that Indian agriculture sector’s efficiency would vastly improve if Australian expertise on the field gets transferred to India.
She said that dairy and farm goods exports remain on top of the agenda of the bilateral FTA with India.
Mr Wood said Australia’s expertise in manufacture of life-saving equipment and supply could help India meet its health requirements if the customs duty of 40 plus is removed once the FTA is in place.
Mining sector
Pointing out that Australia is an attractive place for investment in mining and other resources industry, Mr Wood said Australian companies long wanted to operate mining in India but were frustrated.
“It is close to impossible to convince commercially viable mining operations in India,” he said.
He added that India should make open this sector to foreign investment so that best-practices and technology would flow into this sector, bringing in its wake efficient mining operations and improvement in production.
Echoing similar views, the Minerals Council of Australia (MCA) in a recent feasibility study on bilateral FTA highlighted that the cumbersome rules pertaining to foreign investors with extant joint venture partnerships in India could make foreign investment for miners less attractive.
It said though the Hoda Committee report on review of India’s national mineral policy and regulatory Act 1957 has been approved by the Indian Cabinet and a bill drafted, it is unclear when this Bill would go to Parliament.
However, the MCA has backed the negotiations of a FTA with India, as it helps “the anchoring of Australia with the emerging Asian/sub-continent,” besides providing a hedge against further preferential access was being accorded to global competitors.
MCA believes that diffusion of Australia’s best know-how practices in relation to occupational health and safety, environmental and general mine management would produce substantial environmental, safety and economic gains to Indian mining industry immensely.
