Australia is keen to export dairy products, grains, oilseeds and processed food to India and has offered to give tariff concessions to 99% of its traded goods with India under the proposed bilateral free trade agreement in lieu of opening up India’s dairy and agriculture sectors through low or zero tariffs.
The two sides intend to complete the talks for an interim deal, called “early harvest” in trade parlance, by the end of this month.
In FY21, India exported to Australia-comprising refined petroleum, medicaments, railway vehicles including hover-trains, pearls and gems, jewellery, and made-up textile articles-for $4.04 billion, while imports were $8.24 billion. Imports included coal, copper ores and concentrates, gold, vegetables, wool, fruits, nuts, and lentils.
Dairy and agriculture are sticking points in the trade, and the interim package can include products where there is mutual consensus, while the contentious issues can be taken up later.
Commerce and industry minister Piyush Goyal on Monday said that the interim agreement with Australia will cover “large areas of interest”, particularly our labour-oriented sectors like textiles, pharma, footwear, leather products, and agricultural products. The two sides have agreed to conclude a long-pending FTA called a comprehensive economic cooperation agreement by the end of 2022.
However, industry experts cautioned about opening sensitive sectors like dairy and agriculture, as they are huge employers. Once sensitive sectors like dairy and agriculture are open to Australia, others, like the EU and the UK, too, will seek market access and make our products uncompetitive.