After FTA, India and Australia to boost economic ties

After successful conclusion of a preliminary free trade agreement (FTA) last year, India and Australia have started discussions to take bilateral ties forward in areas such as digital trade, micro, small and medium enterprises (MSMEs), traditional knowledge, labour, and sports, two people aware of the development said.

New Delhi and Canberra concluded the seventh round of talks regarding a comprehensive deal on October 20, agreeing to pursue negotiations on five tracks and 14 new areas, including digital trade, government procurement, MSMEs, traditional knowledge, sports, gender, environment, innovations, space, labour, and competition policy, they added requesting anonymity.

“While each partner has identified potential areas of cooperation, both will finally converge on areas of common interests, and take the negotiations further. Meanwhile, formal talks on five tracks – remaining goods, services, digital trade, government procurement, product-specific rules of origin (ROO-PSRs) — have been progressed fast,” one official said.

GRAF ON 2+2

According to official data of the commerce ministry, India’s exports to Australia jumped 17% to $4.9 billion in the first six months (April-September) of 2023-24 while imports fell by 24.6% to $8.3 billion. India key exports to Australia are petroleum products, pharmaceuticals, iron and steel products, electrical machinery, and garments. Its chief imports are coal, gold, iron ore, pulses and minerals. “Most of the imports are feeding to our domestic industries as raw materials,” the second official said.

After operationalising the Economic Cooperation and Trade Agreement (ECTA) with Australia in December last year, the two partners agreed to pursue a wider deal, a Comprehensive Economic Cooperation Agreement (CECA) and have been working on its contours since February. India and Australia are looking to enhance the scope of ECTA, signed on April 2, 2022, and ratified by parliaments of the two countries last November. During Prime Minister Narendra Modi’s visit to Australia in May, he and his counterpart Anthony Albanese reiterated their commitment to concluding CECA by the end of this year.

“The talks for expanding scope of ECTA proves that the deal is mutually beneficial and has immense potential to grow further,” the second official said. The impact of FTA between India and Australia is visible. Australia has become India’s 10th top export destination in April-October 2023 with exports of $5.48 billion, with about 16% year-on-year growth, he added. According to the Australian trade department, in 2022 India was Australia’s 6th largest trading partner with two-way trade in goods and services valued at $46.5 billion.

The comprehensive FTA will take economic ties between the two countries to a strategic level as Australia is expected to offer assured supplies of critical minerals such as lithium and cobalt to India without any disruption, the second official said. The two sides will, however, have to deal with tricky issues such as Australia’s demand for greater access to India’s market for its wines and agricultural products, the officials said.