India is keeping sensitive dairy and agriculture items out of the India-Australia free trade agreement (FTA) as it does not want to compromise the interest of its farmers. But it may give limited market access to a handful of farm items that are not produced in the country, a person close to the negotiations has said.

“India is not offering concessions for items that are essential for the livelihood of lakhs of dairy and agriculture farmers such as milk, butter, milk powder or wheat. This has been clearly communicated to Australia and there is no cause for apprehension for farmers,” the source said.

However, the possibility of giving market access, by reducing tariffs or other import restrictions, for a handful of agriculture items, that are neither produced nor consumed in great quantities in the country, can’t be ruled out in case the situation demands it, the source added.

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“Market access for products such as blue cheese or macadamia nuts, that have no production base or a wide consumer base in India, cannot hurt Indian farmers or dairy producers. Such items can be considered if the negotiations enter an intense give and take phase and there is a lot at stake for the country in terms of potential gains to be made,” the source explained.

In finishing touches

India and Australia are, at the moment, trying to give finishing touches to an interim free trade agreement that would lead to lower import duties and more market access for a limited number of items and sectors. It will subsequently be expanded into a full-fledged Comprehensive Economic Cooperation Agreement covering most trade goods and encompassing several areas such as services, investments, government procurement and intellectual property.

Australian producers, too, have been urging their government to focus on market access for items that are not produced much in India.

The Australian Nut Industry Council, in a representation to the Australian government on the proposed CECA with India, pointed out that for all Australian tree nuts except walnuts, the production in India is close to zero, according to. “Therefore, for almonds, macadamias, pistachios, pecans, and hazelnuts, the progress of the agreement could do so without any effects on local Indian producers. The tariff reductions by India on these nuts should be enough to allow effective entry into the Indian market,” it said.

According to Grain Trade Association of Australia, growth potential for Australian exports remains in commodities that India needs due to shortfalls in production including pulses, grains, horticulture and oilseeds. “Opportunities also exist, or will emerge, for value-added products sought by the growing middle class. Despite this, India remains a difficult market, characterised by fluctuating import demand and sharp and sudden policy changes which make it a high-risk market for exporters,” it said in its submission and asked the government to seek reduction in both tariff and non-tariff barriers.

While India is interested in getting more market access for goods such as textiles, leather and gems & jewellery, it also has expectations of gaining greater opportunities for its workers and professionals through easier visa norms and mutual recognition of professional qualifications.

India’s exports to Australia in 2020-21 were valued at $4 billion, while imports from the country were at $8.5 billion. India was Australia’s seventh-largest trading partner and sixth-largest export market in 2020, driven by coal and international education, according to the Australian government.