India will give continued protection to its sensitive agriculture and dairy sectors against tariff cuts under the Comprehensive Economic Cooperation Agreement (CECA) being negotiated with Australia and limit market access offers only to items where producers would not be affected, sources have said.
“In India, agriculture is high-density and the farming conditions are very different from those in Australia, the peculiarity of which make the sector very sensitive. That is why in the India-Australia interim ECTA, India did not commit on agriculture. Although, Australians are looking for more market access under the full-fledged India-Australia CECA now being negotiated, our sensitivities remain,” a source tracking the matter told businessline.
While India is not going to say no to discussions on opening up the farm sector, it will see if there are items where opening up could benefit consumers without harming producers, and offer market access only for such products,” the source said.
Limited commitments
For instance, in the India-Australia interim Economic Cooperation and Trade Agreement (ECTA), implemented on December 29, 2022, India extended limited commitments in agriculture for just a few items. It agreed that over the next six years it would eliminate tariffs for avocados, certain peas and beans, onions, leeks, asparagus, cherries, berries, macadamias, cashews in-shell, shelled pistachios and hazelnuts and reduce tariffs for apricots, garlic and strawberries.
It also agreed to tariff reduction for lentils, almonds and oranges and mandarins, but within a fixed annual quota. “Australia produces and exports a wide variety of farm products, including wheat, pulses, nuts and meat, that Australian farmers would want included in the CECA without quota restrictions. India will be very careful while weighing demands,” the official said.
While India largely insulated its agriculture and dairy sectors from tariff cuts in the ECTA, wine was an important sector where an exception was made. For wine bottles valued over $5, India agreed to immediately cut import duties to 100 per cent from 150 per cent and phase it to 50 per cent over nine years. For wine bottles valued over $15, import duties were immediately reduced to 75 per cent from 150 per cent with a commitment to phase it to 25 per cent over nine years.
“There is a possibility that more demands will be made in the area of wines. Decisions will be taken by India after consulting its domestic industry,” the source said.
The ECTA covered most of the goods traded between the two countries. While Australia agreed to provide zero-duty access to 100 per cent of Indian goods in five years time, India will provide zero-duty market access to 91 per cent items over ten years. However, the ECTA’s coverage of other areas such as e-commerce, IPR, government procurement, financial services and investments has been minimal. “The India-Australia CECA is expected to move beyond goods for a more comprehensive coverage of other sectors including services, government procurement and investments,” the source said.
India and Australia are hoping to conclude the CECA negotiations by the year-end and have set the target of increasing bilateral trade to an annual $100 billion from $30 billion over the coming years.