By Priti Naik
India signs the much-awaited trade deal by making more than 95% of roughly 12,000 Indian goods get duty-free access to the Australian market. India will keep its sensitive dairy sector out of the ambit of the interim pact, but will allow premium Australian wine at concessional duties.
The scope of the pact will be expanded to cover 100% Indian goods in five years. About 70% of Australian products will get duty-free and concessional access to the Indian market under the Economic Co-operation and Trade Agreement, as the deal will be formally known. This will be increased to cover 85% of goods in 10 years. New Delhi will also get greater access in about 100 services. Importantly, the deal will also ensure freer movement of skilled professionals from India under the so-called Mode-4 services. Both the sides will forge a broader free trade agreement (FTA) in due course to build on this partnership.
The deal will be signed by commerce and industry minister Piyush Goyal and his Australian counterpart in the presence of Prime Ministers Narendra Modi and Scott Morrison virtually. The basic customs duty on premium Australian wine will be cut in phases from the current 150% to 100% and then to 75%. This is designed to protect the Indian wine industry that doesn’t typically operate in that high-end segment. Public procurement isn’t part of the deal yet. At just $8.6 million, spirits and beverages, including wine, accounted for a tiny slice of Australia’s exports to India until January last fiscal, thanks to the prohibitive impost.
The current deal will be a win-win situation for both the countries, said the official sources. It augurs well for Australia, which is expected to go to polls in May. This deal goes beyond the realm of trade, as it covers strategic considerations as well, said a senior government official. Both the countries are part of the strategically-important QUAD grouping along with the US and Japan. Similarly, together with Japan, they form a supply-chain resilience initiative, a move that is seen as countering China’s “weaponization” of supply chains.
On March 21, the Prime Ministers of both the countries had committed to bolstering bilateral co-operation and an early conclusion of a Comprehensive Economic Cooperation Agreement (CECA), as the broader FTA will be formally known.
India had a merchandise trade deficit of $7.2 billion with Australia in the first ten months of FY22. It shipped out goods worth only $6.3 billion, while its imports from Australia stood at $13.5 billion. Major traded items include mineral fuels, pharmaceutical products, organic chemicals and gem and jewelry. Bilateral trade, including services, were as much as $27 billion in FY21.
