India Aiming To Close FTA Negotiations With Australia In 2 Months: Report

India is aiming to expedite negotiations for a free trade agreement (FTA) with Australia over the next two months to resolve sensitive issues and close the deal, according to a senior government official.

“With elections in Australia next year, if we don’t make progress in these two months, the talks could extend beyond that,” said Rajesh Agrawal, Additional Secretary in the Department of Commerce, during a press briefing.

The eleventh round of negotiations is scheduled for next month. The India-Australia Economic Cooperation and Trade Agreement (AI-ECTA), which took effect in December 2022, is currently being expanded through discussions for a comprehensive economic cooperation agreement (CECA).

Agrawal noted that the trade agreement has been utilized over 80 percent, indicating significant benefits for businesses in both countries. “Officials have been directed to explore the possibility of expediting the CECA. There are sensitivities on both sides, and we aim to engage in discussions over the next two months to address these concerns and work towards closure,” he added.

Australia is a key trading partner for India in the Oceania region, with merchandise trade between the two nations reaching around $24 billion in 2023-24. Last fiscal year, India’s exports to Australia totaled $7.94 billion, while imports were $16.15 billion. Trade has remained around $25 billion since 2021-22.

Regarding the review of the India-ASEAN free trade agreement in goods, Agrawal emphasized India’s commitment to complete the process by 2025. This review is particularly important as India faces tariff imbalances in the agreement, having offered blanket “74 percent plus” tariff eliminations for all ASEAN countries.

“However, we’ve seen higher tariff eliminations from lower-order economies and minimal reductions from larger, rapidly growing economies. Addressing this tariff asymmetry is essential for a balanced FTA,” he stated.

India is also discussing conducting the review on a country-by-country basis within the ASEAN bloc, which consists of ten member states but is not a customs union. “This approach would allow India to tailor tariff concessions more effectively,” he explained.

While ASEAN typically prefers a unified set of concessions, India is working to find flexibility in the review process to address these asymmetries.

ASEAN countries include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. The review of the agreement is a longstanding demand from the Indian industry, which seeks an upgraded pact to eliminate barriers and prevent misuse of the trade agreement.

The pact was initially signed in 2009, and ASEAN is an important trade partner for India, accounting for about 11 percent of its global trade. In 2023-24, India’s exports to the ASEAN bloc were $41.2 billion, while imports reached $80 billion, with ASEAN representing 10.9 percent of India’s total global trade.

MUST READ:  Horizon Robotics Targets $696 mn Hong Kong IPO