India-Australia trade deal today, wine will be cheaper

According to government officials of both the countries, more than 95% of Indian goods will get zero duty access on the first day of the entry into force of the agreement, the rest is earmarked for phased concessions. Around 70% of Australian goods will get access to a discounted fee from day one. This is the first time India has agreed to reduce the 150 per cent duty imposed on wines and spirits – at least from a major wine-exporting country – and could become a test case for other free trade agreements. For example, the UK wants concessions on its Scotch whisky.

The duty on Australian wines will be reduced from 150% to 25% over a period of 10 years. Based on price, concessions will be provided on Australian wines under two categories.

On its part, India will benefit from duty-free access to labour-intensive sectors such as textiles, gems and jewellery, leather and footwear. India will also benefit from the liberalized visa regime, which will facilitate the movement of professionals. “We can confirm that Australia and India will sign a trade agreement tomorrow, the India-Australia Economic Cooperation and Trade Agreement (IA-ECTA). We can confirm that alcohol will be part of the agreement,” said an Australian government official. Said who did not want to be named.

Sensitive sectors including dairy, sunflower oil, wheat, rice, walnuts and medical equipment are excluded from the agreement, which will be implemented after it is passed by Australia’s parliament.

“Dairy is not part of the deal as both the countries have taken care of each other’s sensitivity. Australia is likely to benefit from lower tariffs for Australian wines. However, India has ensured that there is no negative impact on the Indian winners.”

Australian Trade Minister Dan Tehan said in February that Australia understands India’s sensitivity to dairy, beef and wheat.

India has offered a phased tariff cut on Australian wines priced above a certain threshold as it will not affect the low-cost Indian wine industry. Australia is the world’s sixth largest wine producer and fourth largest wine exporter.

“The Australian economy is largely a (natural) resource-based economy. Manufacturing accounts for 6.5% of the Austrian economy and this is where there is scope. Furthermore, India will benefit in all its labor-intensive sectors. Exported About 50% of the goods shipped already attract 0% duty and the rest at 5%. However, most goods exported to Australia attract 5% duty,” said an Indian government official.

Emailed queries to spokespersons for India’s Ministry of Commerce and Industry and the Australian Embassy in New Delhi had not been answered till press time.

Bilateral trade between the two countries grew 120 per cent in the April-December period, in line with the Supply Chain Resilience Initiative launched earlier this fiscal year to counter China’s dominance in the supply chain in the Indo-Pacific region .

Exports from New Delhi to Canberra grew by 101 per cent in the same period and imports were up by 130 per cent over the same period last year. With this, the trade gap between the two countries widened in favor of Australia to $6.46 billion, as against $2.46 billion last year. Textile exports to Australia were close to $0.5 billion in the April-December period, compared to $200-220 million in the same period last year. “The India-Australia partnership goes beyond trade,” the Indian government official said. The partnership will be at the political and strategic level, the official said. Both countries want to build on the Supply Chain Resilience Initiative.

ravi.dutt@livemint.com