Home/ News / India/  India-Australia trade accord today, wines to get cheaper

High-end Australian wines are set to become cheaper after India and Australia sign an “enhanced" interim trade agreement today (Saturday) that will also give all Indian exports concessional duty access over a five-year period.

Over 95% of Indian goods will get zero duty access on day one of the pact coming into force, with the rest set for phased concessions, according to government officials of the two countries. About 70% of Australian goods will get concessional duty access from the first day. This is the first time India has agreed to lower the massive 150% duty it imposes on wines and spirits—at least from a major alcohol-exporting country—and could well become a test case for other free trade agreements. The UK, for instance, wants concessions on its Scotch whisky.

The duty on the Australian wines will come down from 150% to up to 25% over a period of 10 years. Concessions would be provided on Australian wines under two categories based on the price.

On its part, India will gain from duty free access for a slew of labour-intensive sectors such as textiles, gems and jewellery, leather and footwear. India will also benefit from a liberalized visa regime allowing easier movement of professionals. “We can confirm that Australia and India will be signing a trade agreement tomorrow, the India-Australia Economic Cooperation and Trade Agreement (IA-ECTA). We can confirm that wine will be part of the agreement," said an Australian government official who did not want to be named.

Sensitive sectors including dairy, sunflower oil, wheat, rice, walnuts, and medical devices, have been kept out of the pact, which will be implemented once it is passed by Australia’s parliament.

“Dairy is not part of the deal as both countries have taken care of each other’s sensitivities. Australia is likely to benefit from reduced duties for Australian wines. However, India has ensured that Indian winemakers are not impacted negatively," the official said.

Australian trade minister Dan Tehan said in February that Australia understands the sensitivities that India has when it comes to dairy, beef, and wheat.

India is likely to have offered phased tariff reduction on Australian wines priced over a certain threshold as it will not affect the low-cost Indian wine industry. Australia is the sixth largest wine producer and the fourth largest wine exporter in the world.

“The Australian economy is largely a (natural) resource-based economy. Manufacturing contributes 6.5% to the Austrian economy and this is where the scope is. Besides, India will benefit in all its labour-intensive sectors. About 50% of the goods exported attracted 0% duty already and the rest was at 5%. However, most goods exported to Australia attracted 5% duty," an Indian government official said.

Queries emailed to the spokespersons for India’s commerce and industry ministry and the Australian embassy in New Delhi weren’t answered till press time.

Bilateral trade between the two countries grew by a whopping 120% in the April-December period, in line with the supply chain resilience initiative launched earlier this fiscal to counter China’s dominance in the supply chain in the Indo-Pacific region.

New Delhi’s exports to Canberra were up by a sharp 101% in this period and imports were 130% higher compared to the corresponding period last year. With that, the trade gap between the two countries jumped to $6.46 billion in favour of Australia, compared with $2.46 billion last year. Textiles exports to Australia in the April to December period was close to $0.5 billion, compared to $200-220 million in the corresponding period last year. “The India-Australia partnership goes beyond trade," the Indian government official said. The partnership would be at a political and strategic level, the official said. Both countries are looking to build on the supply chain resilience initiative.


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Updated: 02 Apr 2022, 06:48 AM IST
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