India, Australia set to conclude early harvest trade deal this month

India and Australia are on course to ink an early harvest trade deal by end of this month while Australian Prime Minister Scott Morrison is set to unveil a ₹1,500-crore investment package to boost the bilateral ties at a virtual summit with PM Narendra Modi on Monday.

The likely finalisation of the early harvest or 'Phase-one' of the comprehensive economic cooperation agreement was confirmed by Australian High Commissioner to India Barry O'Farrell on Sunday. "We are hopeful of signing the Phase one (early harvest) trade deal by end of this month," O'Farrell told reporters.

‘Historic first virtual summit’

At present, the bilateral trade volume is estimated at around $12 billion and it is expected to witness an increase following the signing of the early harvest trade deal on goods and services. Monday's summit follows the historic first virtual summit between Modi and Morrison in June 2020, when the India-Australia relationship was elevated to a 'Comprehensive Strategic Partnership'.

Diplomatic sources said the summit will reflect that Australia and India are "top tier partners" and they are ready for wider ambition and practical progress in a fast-changing world. They said Morrison will announce a ₹1,500-crore investment package (Australian $280 million) for expanding cooperation in a range of areas including clean technology and critical minerals and the space sector.

At the summit, the two sides are expected to make a specific announcement on cooperation in rare earth minerals. Australia accounts for 55 per cent of global lithium production and it possesses over 20 per cent of global lithium deposits.

Union Mines Minister Prahlad Joshi is likely to travel to Australia soon to explore specific projects relating to rare earth minerals. The sources said ₹152 crore of the total package will be set aside for setting up of new centres to further enhance bilateral ties, a separate amount of ₹97 crore will be for skill development programmes and ₹136 crore will be earmarked for boosting space cooperation.

Largest ever Australian govt investment

The financial package of ₹1,500 crore will form the largest ever Australian government investment in the India-Australia bilateral relationship, they said. The sources said an announcement is likely to be made at the summit having an India-Australia young defence officers exchange programme. The programme is likely to be named after India's first Chief of Defence Staff, Gen Bipin Rawat, who died in a helicopter crash in December.

The two sides are also expected to firm up a letter of intent on the migration and mobility of citizens of the two countries. Australia is also likely to announce the return of 29 Indian artefacts from its museums. The sources said Modi and Morrison will focus on building a robust bilateral architecture considering the post-pandemic world.

"Prime Minister Morrison will make announcements on a range of creative new initiatives to lift the relationship to even a higher level," a source said. The Ministry of External Affairs (MEA) on Thursday said Modi and Morrison are expected to commit to closer bilateral ties in trade, critical minerals, migration and mobility, and education.

“The virtual summit will lay the way forward on new initiatives and enhanced cooperation in a diverse range of sectors between India and Australia,” it said. "Prime Minister Modi and I will discuss deepening our trade and investment relationship and harnessing new economic opportunities to support our mutual economic recovery and growth," Morrison said in a statement on Friday.

Growing ties

Ties between India and Australia have been on an upswing in the last few years. In June 2020, India and Australia signed a landmark deal for reciprocal access to military bases for logistics support. The Mutual Logistics Support Agreement (MLSA) allows militaries of the two countries to use each other's bases for repair and replenishment of supplies, besides facilitating scaling up of overall defence cooperation.

The Australian Navy was part of the Malabar naval exercise hosted by India in November 2020 as well as last year. The navies of the US and Japan were also part of it. Australia was part of the Malabar exercise this year as well.

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