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Aiming to seal interim trade deal with Australia soon: Commerce and industry minister Piyush Goyal.
Mar 25, 2022

India and Australia are engaged in 'very active discussions and negotiations' for a proposed interim trade deal and are working towards its early conclusion, commerce and industry minister Piyush Goyal said on Wednesday, amid speculations that the signing of the pact may be delayed.

Asked about the time-frame for clinching the deal, Goyal said it’s always difficult to set a deadline for such negotiations. Prime Minister Narendra Modi and his Australian counterpart Scott Morrison held virtual talks on Monday. 'They have both reiterated the commitment of both the countries for an early conclusion of the interim trade deal,' Goyal said.

The statement comes at a time when India is under pressure from Western nations to take a stand against Russia’s invasion of Ukraine. A senior trade executive and a diplomat said the issue might have weighed on the decision on the trade deal as well, apart from possible last-minute changes in the negotiating position. However, a senior government official ruled out any impact of the Ukraine war on the decision to delay the interim deal.

Just before the India-Australia virtual summit on Monday, both the sides were hoping to seal the interim deal before the end of March; some expected it to be hammered out as early as Tuesday.

In fact, on February 11, both the countries had announced that the interim trade pact would be signed within a month, and a broader free trade agreement, to be called the Comprehensive Economic Cooperation Agreement (CECA), would be hammered out within a year of the operationalisation of the early-harvest deal.

Sources have told FE that India will likely allow high-end Australian wine at a concessional duty as part of the interim trade deal but keep dairy products and certain sensitive farm items out of its purview. India is expected to get duty concession in some labour-intensive sectors, including agriculture and textiles, and greater market access in pharmaceuticals.

India had a merchandise trade deficit of $7.2 billion with Australia in the first ten months of this fiscal. It shipped out goods worth only $6.3 billion, while its imports stood at $13.5 billion. Major traded items include mineral fuels, pharmaceutical products, organic chemicals and gem and jewellery.

Ukraine war could cause some disruptions

Goyal said the ongoing Russia-Ukraine conflict can potentially cause some disruptions in trade and the government is in regular talks with exporters to address any issue emerging from it. The challenges may be in the form of elevated global commodity prices, higher inflationary pressure, disruption in shipping routes and spurt in freight charges.

'Those challenges are there before us and that certainly may lead to some kind of disruption because it is coming along with Covid, which is also rearing its head. But we are completely on top of these issues and are in continuous dialogue and hand holding our exporters on a regular basis,' Goyal said.

UAE FTA to be in force in six weeks

Goyal said the India-UAE FTA is already ratified by Abu Dhabi and it would be in force in about six weeks. Both the countries signed the FTA last month, which was India’s first such pact in a decade.

FTP to be extended

Goyal said given the lofty level of exports and new challenges, the validity of the current foreign trade policy (FTP) could be extended for some more time. This would allow the ministry to firm up a new FTP, factoring in new global challenges as well as opportunities.

About the new SEZ law, Goyal said the ministry will start stakeholder consultations from April.

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