India and Australia signed a wide-ranging economic pact on Saturday, cutting duties on more than 85 per cent of goods exported to the South Asian nation, as both governments secure alternative supply chains and counter an assertive China.
Closer engagement between the two Quad alliance partners comes even as Australia, along with Japan and the US push India to take a stronger stand on Russia’s invasion of Ukraine. The South Asian nation has stayed away from outrightly condemning Russia.
“This agreement opens a big door into the world’s fastest-growing major economy for Australian farmers, manufacturers, producers and so many more,” Australian Prime Minister Scott Morrison said in a statement.
The free trade deal is expected to help New Delhi forge deeper ties with the raw material-rich nation, as India seeks to become a manufacturing hub to revive its pandemic-hit economy. For Australia, the agreement opens doors to a market of more than 1.4 billion people, as Canberra grapples with China’s trade curbs on a range of commodities exports.
The signing of the pact comes before a national election campaign in Australia, with Mr Morrison’s centre-right government pushing a narrative of strong economic management as it struggles to make up ground in opinion polls.
Speaking at the virtual signing ceremony Australian Trade Minister Dan Tehan said the agreement “will underpin the economic stability of the Indo-Pacific.”
This is the second major trade agreement that the Modi government has signed so far after sealing a similar deal with the UAE earlier this year.
Trade Minister Piyush Goyal said India expects bilateral trade between the two countries to almost double from the current $27 billion, to $50bn, over the next five years.
“There is huge potential in areas like textiles, pharmaceuticals, hospitality, gem and jewellery and IT among others,” Mr Goyal said.
Adequate safeguards have been provided for businesspersons in both countries, he said.
Australia is among India’s top 15 trading partners, Indian government figures show. The pact, that’s been almost a decade in the making, will give greater market access and slash duties on a range of goods including, sheep meat, wool, wine, coal, alumina and metallic ores, sold by Australia in India.
India has also agreed to reduce duties on Australian wine. Tariffs on shipments with a minimum import price of $5 per bottle will be reduced to 100 per cent from 150 per cent while duty on bottles costing $15 is being slashed to 75 per cent.
The trade pact is also likely to help India integrate further with other nations of the China-backed Regional Comprehensive Economic Partnership, a deal that it had shunned due to apprehensions of getting deluged by cheap Chinese goods. India has bilateral deals with most of the RCEP nations barring China and New Zealand.