India and Australia are all set to sign a free trade agreement (FTA) on Saturday, covering goods including textiles, pharmaceuticals, health, education, renewables, and gems and jewellery, and a number of sectors such as services, rules of origin, sanitary and phytosanitary measures and customs procedures. The development comes barely seven months after the re-launch of negotiations in September last year.
The pact, to be called the India-Australia Economic Cooperation and Trade Agreement, will be signed by Commerce & Industry Minister Piyush Goyal and his Australian counterpart Dan Tehan.
“The agreement will be much more than a mini trade pact that was initially being planned as a first step towards a full-fledged agreement. It will cover a whole gamut of areas. However, in areas where some negotiations are yet to be finalised, there would be a provision for expansion,” a source tracking the matter told BusinessLine.
Pharma focus
Pharmaceuticals is one area where India hopes to make substantial gains and increase business by up to $1 billion in the next three years, the source said.
“One of the major positive steps forward provided by the agreement is that the Therapeutic Goods Administration of Australia will utilise reports from a comparable regulator as recognised by it in relation to the pre-market evaluation of products. Further, the Therapeutic Goods Regulator may utilise good manufacturing practice inspection reports from regulatory authorities recognised by it as a comparable regulator in relation to the quality assessment of manufacturing facilities in India,” the source added.
This is a major breakthrough as Indian companies approved by comparable overseas regulator countries like the US, UK, Canada, EU, Switzerland and Singapore will have expeditious approvals and rapid market access in the Australian pharmaceutical market which is growing between 15-20 per cent annually, the source added.
Details awaited
While other details of the pact will be shared on Saturday, India is likely to make gains in labour-intensive sectors such as textiles, leather, auto components, refined petroleum and gems & jewellery.
Australia, on the other hand, may have greater market access for its high-end wines, which, at present, face import duties of a steep 150 per cent. Other items where duties may be reduced include nuts, cosmetics & personal care products, minerals and exclusive processed food items.
India and Australia had started talks on a Comprehensive Economic Cooperation Agreement way back in 2011, but the negotiations were suspended in 2015 as India was not willing to meet Australia’s demands for farm and dairy products while its own demands of visa liberalisation were being ignored.
The negotiations re-started in September 2021, when the two trade ministers decided to come up with an interim trade deal by end of 2021. “The Australians, however, wanted a larger number of areas to be covered in the deal as they feared that going for the easier areas in an interim agreement could make a bigger deal more difficult,” the source said.
India was Australia’s seventh-largest trading partner and the sixth-largest export market in 2020, led by coal and international education, according to the Australian government. India’s total trade with Australia in 2020-21 was at $12.29 billion with exports at $4.04 billion and imports at $8.25 billion.