Australia interim trade deal to be inked today: 95% exports to be duty free

India is set to sign an interim trade agreement with Australia on Saturday, which will give exporters zero duty access to the Australian market for over 6,000 goods, including labour intensive products such as textiles, leather, apparel and footwear.

The zero duty access for Indian exports to Australia will cover over 95 per cent of shipments to Australia immediately and give 100 per cent of Indian exports zero duty access over five years.

Officials said that most goods that India exports to Australia currently attract a 5 per cent import duty, putting them at a disadvantage when compared to goods from nations with which Australia has free trade agreements (FTAs) or least developed countries which face zero duty. “So they (competitor countries) have that advantage of 5% (duty)… especially on labour intensive sectors: textiles, apparel, leather, footwear… India would be able to neutralise that disadvantage we have vis-a-vis our competitors,” an official said.

India, in turn, is set to provide zero duty access to over 70 per cent of Australian imports with lower tariffs on certain other products including Australian wine. Officials said the deal was an “enhanced partnership” agreement with a comprehensive FTA likely to be concluded subsequently.

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India signed a Comprehensive Economic Partnership Agreement with the UAE in February and is currently negotiating FTAs with the UK, EU and Canada.

“We have tried to preserve the sensitivities of India” , said an official, adding that India had excluded dairy products from the agreement. Australia’s Trade Minister Dan Tehan had previously noted that Canberra understood that beef, dairy and wheat were sensitive issues for India.

As per media reports in Australia, Australian products that will receive zero duty access under the pact include metallic ores, lamb, and wool. The deal will have safeguard provisions similar to those in the UAE FTA which allows for a return to higher duties if there is a sudden surge in imports of a particular product which negatively impacts domestic industry.

Merchandise trade between India and Australia stood at $12.3 billion in FY21, with India exporting goods worth $4 billion and importing goods worth $8.3 billion. Key exports to Australia include petroleum products, apparel, textiles and engineering goods. Coal, metallic ores and other raw and intermediate products are among major imports from Australia.

Coal alone accounted for over three-fourths of imports from Australia. Coal imports currently fetch a duty of 2.5 per cent. which will be removed in the agreement.

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