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Eager to access India’s expanding services market, Australia wants New Delhi to not only make binding commitments in areas such as insurance and retail in a bilateral free trade agreement (FTA) being negotiated but also give an assurance that future openings in the legal and education sectors, among others, would get incorporated into the pact.
“In the last round of negotiations in New Delhi, Australia had also proposed that if in the future the two countries offered higher market access for goods and services to any other trading partner, the India-Australia FTA should get upgraded to that extent. We have not made up our mind on this,” a Commerce Ministry official told BusinessLine .
The proposed India-Australia FTA, formally called the Comprehensive Economic Cooperation Agreement, will result in lower import duties on industrial and farm goods, greater access to the services market and easier investment norms in both countries.
Australian Trade Minister Andrew Robb, who will be in New Delhi this week, will meet his Indian counterpart Nirmala Sitharaman to resolve knotty issues and draw up a road-map on concluding talks by the year-end as decided by Prime Minister Narendra Modi and former Australian PM Tony Abbott.
The country’s Attorney General, George Brandis, will also visit the Capital this week and hold talks with Law Minister DV Sadananda Gowda on a number of issues, including the proposed opening up of India’s legal sector.
Cautious note“Since access in the dairy and farm sector in India will be mostly limited to high-end products, Australia is trying to ensure that it gets as much as possible in the services sector and has intensified pressure in the last mile of the negotiations. We need to be careful as once commitments are made it is not easy to back-track,” the official said.
India’s FDI policy allows 49 per cent foreign direct investment (FDI) in the insurance sector and 51 per cent FDI in multi-brand retail. By binding these commitments in an FTA, the country could lose the freedom to change its domestic laws and lower FDI caps.
“It would be a big step for us to agree to include items such as insurance and retail in the FTA. To give a commitment that further openings would also become part of the pact would be very difficult,” the official said.
The Australians are also eyeing an entry into the legal and education sectors. Although, India has not yet opened up the legal sector to foreign players and is yet to allow repatriation of profits in education, the government is working on it and the Australians are hoping for its inclusion in the FTA, the official added.
As Australia has already signed an FTA with China, it is important for India to do the same so that its exporters also benefit from lower duties on items such as textiles, pharmaceuticals and electronics.
India-Australia bilateral trade was valued at about $14 billion in 2014-15, with Australian exports at $11 billion and Indian exports just at $3.2 billion. Australia-China bilateral trade is worth 10 times more, at $160 billion.
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