Early harvest trade deal with Australia to be finalized within next 30 days : Commerce Minister Piyush Goyal

India has reached a "near conclusion" of the early harvest part of the proposed trade deal with Australia, Commerce and Industry Minister Piyush Goyal has said.

"After grueling negotiations over the past 48 hours, I am confident in telling you that our teams should be in a position to come up with the early harvest part of the FTA in the next 30 days," Goyal told journalists after completing the latest round of negotiations on the proposed pact on January 11.

Both governments are officially targetting to finalize the deal within the next month.

Australia was India's 15th largest trading partner as of 2020-21, with trade worth $12.29 billion, and a trade deficit of $4.2 billion.

This was affirmed by Australian Trade Minister Dan Tehan, who is currently in Delhi for the talks. Both governments are planning to conclude and sign an early harvest pact soon, and follow up with discussions on a more comprehensive free trade agreement right after that.

An early harvest trade deal is one in which both parties sign off on a set of easily achievable deliverables. Such pacts target specific goals such as tariff reduction and market access on select items while leaving more contentious items off the agenda.

Goyal said the deal covers a large number of subjects, including trade in goods, trade in services, Rules of Origin, sanitary and phytosanitary conditions, customs procedures, legal and institutional issues, among others. "The text is also being simultaneously finalized," he said.

"It will be a milestone in the relation between the two countries. We have a busy 30 days ahead. But the warmth and the welcome we have received makes me very confident," Tehan said.

Broad based coverage

The latest headway in talks came about after reaching a common position in reducing both import duties and tariff barriers. Questioned on the area o coverage, Goyal said the deal would help in boosting India's export capabilities. "We have accommodated and respected each other's sensitivities. Both sides have been very fair and understanding about the sensitivities that each has. But it is a win-win agreement," Goyal said.

While officials refused to confirm the specific categories that constitute these sensitive categories of goods, it could mean India has kept agricultural and dairy items out of the early harvest agreement.

However, this would prove to be a loss for Australia, which has consistently sought market access in these two areas. Australia has one of the largest dairy industries in the world. "We understand the sensitivities that India has when it comes to dairy, beef and wheat," Tehan stressed to a similar question.

Senior Australian trade officials had earlier told Moneycontrol that Australia aims to significantly expand business with India in diverse sectors such as food and grains, core minerals, and high-tech equipment. 

Fast negotiations

If finally completed within the stipulated 30 days, the deal will be the fastest early harvest pact negotiated by India. Discussions on the CECA had begun 11 years back in 2011, but had faltered repeatedly due to disagreements over allowing Australia access to India's agri and dairy markets. The latest talks on the deal were announced in September 2021.

India had announced in late August 2021 its intention to begin renegotiations on the CECA, and sign an early harvest deal by December 2021.

This was followed by an announcement in September 2021 saying both sides will finalise the early harvest pact by Christmas of 2021, to be followed by a comprehensive free trade agreement in 2022. But despite a lot of enthusiasm from both sides, the Christmas deadline was missed. While the government had been confident of working out the details soon, officials say existing issues have derailed the talks.

Tourism cooperation

Both Ministers also renewed the Australia-India Memorandum of Understanding (MoU) on Tourism Cooperation.

The MoU will help encourage more Indian visitors to Australia and the capabilities of Australian tourism businesses. Both governments will also work with airlines and airports to boost aviation capacity between Australia and India.

“India was Australia’s fastest-growing source of international visitors, with Australia welcoming almost 400,000 visitors from India in 2019. That year, India was our sixth most valuable market for spend, contributing $1.8 billion to our economy,” Tehan said.

Both countries also share important people-to-people links, with around 750,000 people of Indian origin calling Australia home.

"As of 21 February, Australia has announced it will be open to all international tourists. As a result of the MoU, we expect many more Australians to come to India and visit the many sites here, Tehan said.