India and Australia’s Comprehensive Economic Cooperation Agreement (CECA) is expected to be finalised by September of next year, according to two people with knowledge of the development, as quoted to Mint. The interim trade agreement between the two nations is scheduled to take effect on December 28.
The general elections in India, which are scheduled for 2024, might hinder trade negotiations with a number of nations, including Australia, making the September deadline for CECA negotiations with Australia more significant. Trade negotiations with the UK, which were planned to be finished by this year’s Diwali, were postponed because of unrest in the country’s political structure.
“The biggest threat to completing the deal before 2024 actually does not have anything to do with trade policy.” The same source cited above noted, “There is a worry that the Indian system will lose its ability to engage during G20 (presidency) and once political parties start to move into campaign mode.”
Both nations were able to negotiate an interim trade agreement this year, some ten years after negotiations first began and then ceased. In the following five years, it is anticipated that trade between Australia and India will more than double due to the Economic Cooperation and Trade Agreement (ECTA). However, experts believe that in order for Indian exporters to benefit more from the free trade pact with Australia, a comprehensive trade agreement would be essential.
After China substantially increased its duties on Australian wine, Australia is anticipated to demand more tax reductions on its wine imported from India during the CECA negotiations. Following tensions between the two nations, China increased its import taxes on Australian wine by nearly 200 per cent.
“The duty structure decided on wine in the ECTA negotiations was pretty comprehensive. We are not looking to ease it further during the comprehensive trade negotiations. We aim to complete the CECA negotiations by the end of next year,” the official stated.
In accordance with the interim FTA, New Delhi committed to cutting Australian wines with a minimum import price of $5 per bottle’s tariffs from 150% to 100%, then gradually to 50% over the course of ten years. Australia agreed to permit duty-free wine imports from India. Over the course of ten years, the duty on bottles costing $15 or more will be cut from 150% to 75% and then to 25%.
The first person aware of the development continued, “Anything that looks like it might have anything to do with farmers may become impossible. Australia is also unlikely to do a deal that doesn’t have something for farmers in it. So that is a risk of derailing. The fact that we have environmental and labour standards in other free trade agreements points to the fact that this is an important part of Australia’s trade policy.”
Given that it would have duty-free access to the Australian market, the labour-intensive Indian textile and apparel sector stands to benefit greatly from the trade agreement.