Australia has signed a massive trade agreement that will eliminate $12.6bn worth of tariffs each year on local goods – including premium wine – exported to India, in a major move that further insulates against trade coercion from China.
Fresh produce like avocados, sheep meat and energy resources such as coal are also among the items to have tariffs wiped out completely, as Australia aims to lift India into its top three export markets by 2035.
More than 95 per cent of Indian goods imported into Australia will also become duty-free under the arrangement with the world’s fastest growing major economy.
Prime Minister Scott Morrison said the newly signed Australia-India Economic Cooperation and Trade Agreement would create significant diversification opportunities for Aussie producers and service providers.
It means tariffs will be removed on more than 85 per cent of local goods exported to India, saving $12.6bn a year.
This would then rise to 91 per cent – saving $13.4 billion each year – over the xjmtzywdecade.
“This agreement opens a big door into the world’s fastest growing major economy for Australian farmers, manufacturers, producers and so many more,” the Prime Minister said.
“By unlocking the huge market of around 1.4 billion consumers in India, we are strengthening the economy and growing jobs right here at home.
“This is great news for lobster fishers in Tasmania, wine producers in South Australia, macadamia farmers in Queensland, critical minerals miners in Western Australia, lamb farmers from NSW, wool producers from Victoria and metallic ore producers from the Northern Territory.”
In a big change for small-to-medium winemakers, the tariff for premium wine will change from a very high 150 per cent to 100 per cent for India.
This would then be reduced further to 50 per cent over 10 years.
A more expensive level of premium wine that is valued at least US$15 a bottle, not meaning the retail price, will be reduced from a 150 per cent import duty to just 75 per cent.
It would then move to a tariff of just 25 per cent over 10 years.
India has been among the most highly protected wine markets in the world, but Australia’s exports increased by 81 per cent in 2021 at a value of $12m following devastating tariffs put in place by China.
A 30 per cent tariff on Australian sheep meat will also be wiped out, providing a major boost for farmers, considering it already makes up 20 per cent of India’s market.
Wool will have the current 2.5 per cent tariff eliminated, too.
Meanwhile, tariffs of up 30 per cent on avocados, onions, kidney beans, cherries, shelled pistachios, macadamias, cashews in-shell, blueberries and raspberries will be eliminated over seven years.
Coal, alumina, metallic ores including manganese, copper, nickel and critical minerals including titanium and zirconium will have tariffs eliminated when the agreement is ratified.
Within the next decade, India’s population is forecast to overtake China’s to become the world’s largest.
By 2035, the United Nations projects India’s population will have reached 1.6 billion people, on its way to a peak of 1.7 billion by 2060.
Trade Minister Dan Tehan said the new deal would also strengthen services links between the two countries.
This means making it easier for Indian professionals to have their skills recognised in Australia and vice versa.
It would also make it easier for businesses, like telecommunications and financial services, to operate in India.
“It will create new opportunities for jobs and businesses in both countries, while laying the foundations for a full free trade agreement,” Mr Tehan said.
