India, Australia to sign interim trade pact on Saturday; thousands of Indian exports to get duty free access

The pact will enter into force on a mutually agreed date once approved by the Union Cabinet in India and Parliament in Australia

The pact will enter into force on a mutually agreed date once approved by the Union Cabinet in India and Parliament in Australia

Indian exporters from more than 6,000 broad sectors, including textiles, leather, furniture, jewelry and machinery, will be given duty-free access to the Australian market immediately after the entry into force of the interim trade agreement between the two countries, according to government sources.

Trade and Industry Minister Piyush Goyal and his Australian counterpart Dan Tehan will sign the India-Australia economic cooperation and trade agreement on Saturday in a virtual ceremony, attended by Prime Minister Narendra Modi and Australian Prime Minister Scott Morrison.

The agreement “which includes trade in goods and services is a balanced and equitable” pact and it will further strengthen the already close and strategic relations between the countries, the Commerce Department said in a statement on Friday.

It will significantly improve bilateral trade in goods and services, create new jobs, raise living standards and improve the general well-being of the peoples of the two countries, it added.

The pact will enter into force on a mutually agreed date once approved by the Union cabinet in India and the Parliament in Australia.

The sources said that on the very first day of the implementation of the interim pact, more than 6,000 tariff lines would be available to Indian exporters without duties.

Australia offers duty-free imports to India from day one on about 96.4% of the export value and this includes many products, currently subject to 4-5% customs duties in Australia, the sources said.

Australia trades in about 6,500 tariff lines while India has more than 11,500 tariff lines.

Labor-intensive sectors that would gain hugely include textiles and clothing, few agricultural and fishery products, leather, footwear, furniture, sporting goods, jewelry, machinery, electrical appliances, rail cars, select pharmaceuticals and medical devices.

In order to protect sensitive sectors, India has several goods in the exclusion category in which no excise concessions are granted. The agreement will include a safeguard mechanism to deal with any unusual surge in imports, the sources said.

Such goods include milk and other dairy products, toys, sunflower oil, walnut, pistachio, platinum, wheat, rice, bajra, apple, sugar, oilcake, gold, silver, chickpeas, jewelry, iron ore, and most medical devices.

The sources also said India will get liberalized standards for more than 100 service sub-sectors.

This agreement is hugely beneficial for India as it mainly imports raw materials and semi-finished products from Australia, the sources said.

On the other hand, India will provide zero tariff access in more than 70% of its tariff lines for Australia, including products such as coal. Coal accounts for about 74% of Australia’s imports and is currently taxed at 2.5%.

About 73% of coking coal, mainly used by steel players, is imported from Australia. India also imports thermal coal from that country.

India will also grant excise concessions to Australian wines in phases over a 10-year period.

It is known that these concessions would be granted for Australian wines in two categories based on price range. Once the pact is in place, the customs duty on the wines will be reduced from 150% to 25% over a 10-year period.

The agreement will contain eight chapters: goods, services, rules of origin, sanitary and phytosanitary measures (SPS), technical barriers to trade (TBT), customs procedures and trade facilitation, legal and institutional issues and movement of natural persons, and trade remedies.

The interim deal paves the way for a Comprehensive Economic Cooperation Agreement (CEPA) with Australia. It will be the second pact after the one with the United Arab Emirates (UAE), signed in February.

Australia is India’s 17th largest trading partner and India is Australia’s 9th largest partner. Bilateral trade in goods and services was $27.5 billion in 2021.

India’s goods exports were worth $6.9 billion and imports were $15.1 billion in 2021.

India’s major exports to Australia include petroleum products, textiles and clothing, engineering goods, leather, chemicals, and gemstones and jewelry.

Imports mainly include raw materials, minerals and semi-finished products.

mr. Goyal will visit Australia next week.

www.thehindu.com

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