Indian exporters from over 6,000 broad sectors, including textiles, leather, furniture, jewellery and machinery, will get duty free access in the Australian market immediately after the interim trade agreement between the two countries comes into force, according to government sources.
Commerce 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, in the presence of Prime Minister Narendra Modi and the Prime Minister of Australia Scott Morrison on Saturday.
The agreement "encompassing trade in goods and services, is a balanced and equitable" pact and it will further cement the already close and strategic relations between the countries, the Commerce Ministry said in a statement on Friday.
It will significantly enhance the bilateral trade in goods and services, create new employment opportunities, raise living standards and improve the general welfare of the peoples of the two countries, it added.
The pact will come into force at a mutually agreed date once it gets approval from the Union Cabinet in India and the Parliament in Australia.
The sources said that on the very first day of the implementation of the interim pact, over 6,000 tariff lines would be available for Indian exporters at zero duty.
Australia is offering zero duty access to India on about 96.4% value of exports from day one and this covers many products, which currently attracts 4-5% customs duty in Australia, the sources said.
Australia trade in about 6,500 tariff lines while India has over 11,500 tariff lines.
Labour intensive sectors which would gain immensely, include textiles and apparel, few agricultural and fish products, leather, footwear, furniture, sport goods, jewellery, machinery, electrical goods, railway wagons, selected pharmaceutical products and medical devices.
To safeguard sensitive sectors, India has several goods in the exclusion category in which no duty concessions will be accorded. The agreement will have a safeguard mechanism to deal with any unusual surge in imports, the sources said.
Such goods will include milk and other dairy products, toys, sunflowers seed oil, walnut, pistachio nut, platinum, wheat, rice, bajra, apple, sugar, oil cake, gold, silver, chickpeas, jewellery, iron ore and most medical devices.
The sources also said that India will get liberalised norms for over 100 services sub-sectors.
This agreement is immensely beneficial for India as it mainly imports raw materials and intermediate goods from Australia, the sources added.
On the other hand, India will be offering zero duty access in over 70% of its tariff lines for Australia which will include products like coal. Coal accounts for about 74% of imports from Australia and currently, it attracts 2.5% duty.
About 73% of the coking coal, used mostly by steel players, is imported from Australia. India also imports thermal coal from that nation.
India will also provide duty concessions to Australian wines in a phased manner over a period of ten years.
It is learnt that these concessions would be provided on Australian wines under two categories based on price range. Once the pact is in force, the customs duty on the wines will reduce from 150% to up to 25% over a period of ten years.
There will be eight chapters in the agreement -- goods, services, rules of origin, Sanitary and Phytosanitary Measures (SPS), Technical Barriers to Trade (TBT), customs procedure and trade facilitation, legal and institutional issues and movement of natural persons, and trade remedies.
The interim deal will pave the way for a Comprehensive Economic Cooperation Agreement (CEPA) with Australia. It will be the second such pact after the one with United Arab Emirates (UAE), which was signed in February.
Australia is the 17th largest trading partner of India and India is Australia's 9th largest partner. Bilateral trade in goods and services stood at $27.5 billion in 2021.
India's goods exports were worth $6.9 billion and imports aggregated to $15.1 billion in 2021.
Major exports by India to Australia include petroleum products, textiles and apparels, engineering goods, leather, chemicals and gems and jewellery.
Imports mainly include raw materials, minerals and intermediate goods.
Mr. Goyal will be visiting Australia next week.
Published - April 02, 2022 04:01 am IST
