The pact will come into force on a mutually agreed date once approved by the Union Cabinet in India and Parliament in Australia
The pact will come into force on a mutually agreed date once approved by the Union Cabinet in India and Parliament in Australia
Indian exporters from over 6,000 broad sectors including textiles, leather, furniture, jewelry and machinery will be granted duty-free access to the Australian market immediately after the interim trade agreement between the two countries comes into effect, 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 in a virtual ceremony on Saturday in the presence of Prime Minister Narendra Modi and Australian Prime Minister Scott Morrison.
The deal, which includes trade in goods and services, is a balanced and fair pact and will further solidify the already close and strategic ties between the countries, the Commerce Department said in a statement on Friday.
It will greatly improve bilateral trade in goods and services, create new job opportunities, raise living standards and improve the overall well-being of the peoples of the two countries, he added.
The pact will come into force on a mutually agreed date once approved by the Union Cabinet in India and Parliament in Australia.
The sources said that on the very first day of implementation of the interim pact, over 6,000 tariff lines would be available to Indian exporters at zero tariff.
Australia offers day-one duty-free access to India for about 96.4% of export value, and this covers many products currently subject to 4-5% duty in Australia, the sources said.
Australia trades around 6,500 fare lines, while India has 11,500 fare lines.
Labor-intensive sectors that would benefit immensely include textiles and clothing, some agricultural and seafood products, leather, footwear, furniture, sporting goods, jewellery, machinery, electronics, railroad cars, select pharmaceuticals and medical equipment.
To protect sensitive sectors, India has several goods in the exclusion category for which no tariff relief is granted. The deal will include a safeguard mechanism to deal with an unusual surge in imports, the sources said.
These commodities include milk and other dairy products, toys, sunflower oil, walnuts, pistachios, platinum, wheat, rice, bajra, apples, sugar, oilcake, gold, silver, chickpeas, jewelry, iron ore, and most medical equipment.
The sources also said India will get liberalized standards for over 100 service sub-sectors.
This deal is of great benefit to India as it mainly imports raw materials and intermediate products from Australia, the sources added.
On the other hand, India will offer duty-free access on over 70% of its tariff lines for Australia, which will include products such as coal. Coal accounts for about 74% of imports from Australia and is currently subject to a 2.5% tariff.
About 73% of coking coal, used primarily by steelmakers, is imported from Australia. India also imports thermal coal from this country.
India will gradually grant tariff concessions to Australian wines over a ten-year period.
It was learned that these concessions would be granted to Australian wines in two categories based on price range. Once the pact comes into force, the tariff on the wines will be reduced from 150% to as low as 25% over a ten-year period.
The agreement will have eight chapters – Goods, Services, Rules of Origin, Sanitary and Phytosanitary (SPS) Measures, Technical Barriers to Trade (TBT), Customs Procedures and Trade Facilitation, Legal and Institutional Issues and Free Movement of Individuals, and Trade Aids.
The Interim Agreement will pave the way for a Comprehensive Economic Cooperation Agreement (CEPA) with Australia. It is the second such pact, following the one signed with the United Arab Emirates (UAE) in February.
Australia is India’s 17th largest trading partner and India is Australia’s 9th largest trading partner. Bilateral trade in goods and services amounted to US$27.5 billion in 2021.
India’s merchandise exports were US$6.9 billion in 2021 and imports were US$15.1 billion.
India’s top exports to Australia include petroleum products, textiles and clothing, engineered goods, leather, chemicals, and gems and jewellery.
The main imports are raw materials, minerals and intermediate products.
Mr. Goyal will be visiting Australia next week.
