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Massive tariff cuts likely as India, Australia sign trade deal

Massive tariff cuts likely as India, Australia sign trade deal

INDIA and Australia inked an interim free trade deal on Saturday (2) that cuts tariffs on billions of dollars of commerce as the two Quad partners bolster their economic ties.

Both signatories are members of the Quad alliance with the US and Japan, which is seen as a counterweight to an increasingly assertive China.


But while they both border the Indian Ocean, India was only Australia's seventh-largest trading partner in 2020, and accounted for just over four per cent of exports last year.

The Economic Cooperation and Trade Agreement was signed simultaneously in New Delhi and Canberra by India's commerce minister Piyush Goyal and his Australian counterpart Dan Tehan in a joint ceremony.

India and Australia are "natural partners, connected by shared values of democracy, rule of law and transparency", Goyal said.

"Our relationship rests on the pillars of trust and reliability aptly reflected in our deepening geo-strategic engagement through the QUAD and the supply chain resilience initiative."

Two-way trade reached around $17 billion last year, with resource-rich Australia exporting sheep meat, coal and other commodities, and India largely supplying services.

At the same time, Canberra's relations with its biggest trading partner China are at their lowest point in a generation, with many Australian goods hit with punitive sanctions and ministerial relations frozen.

Beijing has been angered at Australia's willingness to legislate against overseas influence operations, to bar Huawei from 5G contracts and to call for an independent investigation into the origins of the coronavirus pandemic.

GettyImages 1236291755 British Prime Minister Boris Johnson speaks with Indian Prime Minister Narendra Modi and Australian Prime Minister Scott Morrison during a meeting on day three of COP26 at SECC on November 2, 2021 in Glasgow, Scotland. (Photo by Phil Noble - Pool/Getty Images)

India and China have also seen a sharp deterioration in ties after a high-altitude clash in 2020 left 20 Indian soldiers and at least four Chinese soldiers dead.

The agreement "delivers a clear message that democracies are working together and ensuring the security and resilience of our supply chains", Australian Prime Minister Scott Morrison said at Saturday's signing.

India's prime minister Narendra Modi added it would "contribute to increasing supply chain resilience and to the stability of the Indo-Pacific region".

Negotiations on a comprehensive deal between India and Australia were launched more than a decade ago but stalled in 2015.

A full trade pact is now being negotiated and Morrison, who called Modi a "dear and trusted friend", said he hoped it would be signed by the end of the year.

Saturday's agreement cuts tariffs on more than 85 per cent of Australian exports to India.

In an accompanying statement, Morrison highlighted several products hit hard by the Chinese trade dispute -- like coal, wine and rock lobsters -- which will benefit under the Indian deal, calling it "a big door into the world's fastest-growing major economy".

His conservative government is trailing in the polls ahead of an election in May, and the tensions with China are a key issue.

(AFP)

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