Australia pitches a tech-for-tariff agri deal with India

The import duty on Australian vegetables is 30%, which will be cut to zero in seven years while the duty on fruit is 15-30%—to be halved in the next seven years if the agreement is signed. (Photo: HT)
The import duty on Australian vegetables is 30%, which will be cut to zero in seven years while the duty on fruit is 15-30%—to be halved in the next seven years if the agreement is signed. (Photo: HT)

Summary

  • According to an Australian official, Australia wants to complement Indian agriculture rather than compete with it.

New Delhi: Australia has offered to help India develop climate-resilient crops and grain storage technology in exchange for New Delhi cutting import duties on its farm imports, three people aware of the development said.

India and Australia launched talks for a Comprehensive Economic Cooperation Agreement (CECA) in May 2011. The two sides reached an interim deal - the Economic Cooperation and Trade Agreement—which took effect on 29 December, 2022. The CECA aims to build on the outcomes of ECTA.

Australian high commissioner to India Philip Green underscored the importance of lower barriers to agricultural produce.

“We think that can be a win-win for India because our agriculture sector is prepared to engage much more deeply with India to improve the capability of India’s agriculture, improving yields, more pest-resistant crops, more drought-resistant crops, better storage facilities, better transportation facilities," Green said.

“There’s already quite a lot of that that goes on in the dairy sector, grain sector and the textile sector. And don’t forget that Australian exports of food and fibre can be inputs to Indian industry. So, a larger flow of cotton or wool from Australia to be spun and turned into cloth means making India successes for India," Green added.

The import duty on Australian vegetables is 30%, which will be cut to zero in seven years while the duty on fruit is 15-30%—to be halved in the next seven years if the agreement is signed.

However, opening up the agriculture sector to imports is a sensitive matter for India, given that more than half its population depends on farming and related activities for livelihood.

During trade talks with the European Free Trade Association (EFTA), the four-nation bloc had demanded market access for its cheese and dairy products, which was declined by India.

“Although Australia has demanded duty relaxations for its agri products, as of now, we have not offered any such relief," a commerce ministry official said on condition of anonymity. “We are also evaluating offering them the best deal without affecting our farm community."

Queries sent to spokespeople and secretaries of the commerce and agriculture ministries remained unanswered.

“In its first year, the Australia-India ECTA has delivered benefits to both countries, including Indian exports to Australia of agriculture goods, which are up 15%. Finalizing the CECA negotiations following India’s general elections remains a priority for the Australian government," a spokesperson for the Australian High Commission said.

As per the government’s India Brand Equity Foundation (IBEF), trade in goods and services between India and Australia stood at $18 billion in 2020, $27.5 billion in 2021, $25 billion in FY22 and $25.9 billion in FY23. India’s goods exports were worth $6.89 billion and imports aggregated to $19.01 billion in FY23.

“Despite the ECTA allowing duty-free access for all Indian products, agriculture exports to Australia are expected to remain low. This is because most agriculture products need specific permission for exports to Australia. Australia many times takes over 10 years to give permission for a single product. In the next phase of ECTA negotiations, India should address these non-tariff barriers with Australia before agreeing to reduce duties on Indian goods," said Ajay Srivastava of GTRI.

“Agriculture is a sensitive area for us, unlike the advance economies where it is a fully developed commercial activity. A very significant share of agriculture in India is for sustenance of farmers. While any cooperation in agri research or technology transfer is welcome, the tariff reduction in lieu of the same has to be evaluated deeply," said Ajay Sahai, director general & CEO, FIEO.

An Australian official said, “We have systems in place which enable us to handle grain and store it. We have huge acreage; our farm sizes are huge. We have processes in place that might not work in India, but then we can explore what kind of a model works in India. Those are the things we are exploring."

According to the official, Australia wants to complement Indian agriculture rather than compete with it. “What we target is very much niche or certain segments of the market. So, we’re not looking to disrupt what’s happening in India. But the way to go about it is improving things like productivity, more sustainable agriculture, and less reliance on things like subsidies and other things," the official said, pointing to the need for innovation in agriculture.

“Australia sees value in engaging at a more grower- level in India, because ultimately, India’s agriculture success is also the world’s success," the official said.

“Our manufacturing base is quite small. Therefore, we see a lot of opportunities to tap into India’s significant manufacturing base," the official added.

“We see the food manufacturing sector as a very strong base in which we can supply high-quality ingredients, and high-quality inputs that feed into the manufacturing segment here. We can provide it to India, and then it can be used in India or exported globally. So that’s how we look at it. That’s for us the benefit outside of supplying hotels and other things, and it’s very complimentary," the official added.

Shashank Mattoo contributed to the story

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