Interim FTA between India-Australia likely to be signed soon
- India and Australia are likely to sign an interim free trade agreement (FTA)
- It may allow easier market access for Indian pharmaceutical products, besides duty concessions on gems and jewellery and textiles.
India-Australia interim trade deal
- It follows the Supply Chain Resilience Initiative by India, Japan and Australia to reduce dependence on China.
- It is also aimed at bridging the trade gap between New Delhi and Canberra
- It has more than doubled to $6.46 billion in favour of Australia, from $2.46 billion in 2020-21.
- While India’s exports surged 101% in the April to December period, its imports were 130% higher compared to the year-ago period.
Expected outcomes of Agreement
- It may also offer some concessions in the fields of education, tourism, health and renewable energy.
- Australia is likely to get tariff cuts on premium wines that do not compete with domestic winemakers.
- It will also make way for a comprehensive free trade pact, the negotiations for which will begin after inking the early-harvest agreement
- Indian pharma and medical products, which have received approval from authorities of other developed nations such as the US, UK, the EU, Canada and Japan, are likely to get regulatory approval within 90 days.
- The terms of agreement are similar to the just- concluded deal with the UAE
Economic and Trade cooperation between India-Australia
- Indian exports to Australia : Passenger Motor Vehicles and Machinery, Pearls, Gems and Jewellery, Medicaments, and Refined Petroleum
- Australia’s exports to India : Coal, Non-monetary Gold, Copper, Wool, Fertilisers, and Education-related services
- Joint Ministerial Commission (JMC): estd in 1989
- Aim: to facilitate government-to-government and business-to-business cooperation on a wide range of trade and investment problems.
- ‘An Indian Economic strategy to 2035’: announced by Australia in 2018 , it is a vision document to shape India- Australia bilateral ties
- Prepared by: Australian Think Tank
- Aim: to define a pathway for Australia to unlock opportunities offered by Indian Economic growth
- Sectors identified: Education as flagship sector; Agribusiness, Resources and Tourism as lead sectors;
- States: Andhra Pradesh, Delhi NCR, Gujarat, Karnataka, Maharashtra, Punjab, Tamil Nadu, Telangana, UP and West Bengal
- Australia economic strategy: launched by India
- It is prepared as a response to the India Economic Strategy Report, 2035 released by Australia
- Prepared by: Confederation of Indian Industry (CII) team with contribution from KPMG in India.
- Pillars of strategy : resources; technology & services; and research & innovations.
Reasons for Inconclusive CECA
- Dairy and Agricultural market access issue: India is opposed to greater access for Australian businesses in the sector of dairy and agricultural markets in the interests of its small and marginal farmers and people working in the dairy industry.
- Visa norms issue: India wants greater free movement and relaxed visa norms for its IT professionals, which Australia is reluctant to agree citing local unemployment as the reason.
- High non trade barriers: India wants Australia to soften its high non-trade barriers for Indian products.
- Legal services issues: India is reluctant to open up its doors for legal services from Australia.
- Lack of agreement for market access of Australian products: No concrete agreement on greater market access for Australia’s wine, meat, auto components and financial services industries.
- Rules of origin issue: Both countries also differ in their preference towards Rules of Origin (ROO) in fixing the tariff lines for goods.
- Both countries show significant strategic convergence. Therefore, they must agree on a mutually beneficial CECA as soon as possible in order to enhance complementarity in the economic arena and further strengthen bilateral relations for mutual peace and prosperity.