Even before delegates from India and Australia could begin their meeting in New Delhi on September 30, 2021 and announce the re-launch of negotiations to set up a free trade agreement (FTA), the two countries' ministers had already brokered an understanding over coffee and lunch.
"I don’t know what happened but we just thought let's have a cup of coffee before we get into the delegation level meeting. And we retreated into a small room…we got into a room and started talking," Commerce Minister Piyush Goyal said on December 29 on the occasion of the India-Australia Economic Cooperation & Trade Agreement (ECTA) coming into force.
"That conversation went on for some four hours… And in that four hours, we almost finalised the free trade agreement," Goyal said, referring to his conversation with Australia's then Minister for Trade, Tourism and Investment, Dan Tehan.
"We had our lunch also sitting there, while all the senior officials were pacing outside, worried, (thinking) 'what is cooking inside?' But what was cooking was what we are entering into force today," Goyal quipped.
The negotiations followed quickly, with the first virtual conference taking place on January 4 of this year and the last on March 25. The ECTA agreement was then signed on April 2, 88 days after negotiations officially began.
"If I can take an analogy from cricket, which also binds Australia and India together, this can be called an agreement that was negotiated with the speed of Brett Lee and the perfection of Sachin Tendulkar," Goyal remarked today.
Incidentally, Goyal pointed out, it also took 88 days to finalise the Comprehensive Economic Partnership Agreement with the UAE, which came into force earlier this year on May 1.
Two in a year
Goyal said it was a matter of "great joy and celebration" that two FTAs had come into force in 2022. And he is hopeful of more activity in 2023, with discussions with the European Union, the UK, and Canada slated to take place in January.
When asked if another two FTAs could be agreed in 2023, Goyal remarked: "I am a born optimist."
"At least two bol rahe ho tab tak theek hai. Two nahi bola, achha kiya. Do bolte toh mujhe thodi chinta hoti (If you said at least two, then it's fine. It's good you didn't say just two or that would have left me worried)," the minister added.
"At least two, that's the right spirit."
Sensitivity and potential
In the four-hour long conversation in September 2021, Goyal and Tehan came to an understanding on what areas would be a no-go for either side.
"For the first time ever Australia has done a free trade agreement without dairy and most agricultural products. At that time, I said it's going to be impossible for me to open up dairy. Millions and millions of our farmers and small income families are dependent on it. It's their supplementary income and they cannot compete with…your large farms," Goyal said, thanking the Australian government for being "very, very sensitive and very considerate".
Opportunities abound, though, according to Goyal, with the potential to export a lot of finished products to Australia given that it's a largely raw material and intermediate producing country.
"So it’s a complete win-win," Goyal said, stressing that around 98 percent of India's trade by value will get access to the Australian market with zero duty from Day 1 - today.
"Just a few items, maybe 10-15 items, will get zero duty over the next five years. There the trade value is barely 1.5 percent," he added.
In a statement earlier today, the Australian government said the FTA meant tariffs on more than 85 percent of its exports to India had been eliminated "and locked them in at zero".
"ECTA's entry into force today opens up the world's largest democracy, with nearly one and a half billion people, to Australian exporters – early entry into force sees Australian exporters receive a tariff cut today, followed by another on January 1, 2023," Don Farrell, Australia's Minister for Trade and Tourism Senator, said.
Anthony Albanese, Australia's Prime Minister, tweeted he will visit India in March after receiving an invitation from Prime Minister Narendra Modi, with an eye on improving trade between the countries.
While Goyal and Farrell are "conservatively" looking to increase bilateral trade to $50 billion in the next five years, they are committed to expanding it "far beyond that", with a lot of potential in the services sector, sports, non-traditional sectors such as the wine industry.
In 2021-22, India's exports to Australia amounted to $8.28 billion, with imports of $16.76 billion, giving a total trade value of just over $25 billion.
So far in 2022-23, Australia ranks as India's 10th largest trade partner, with total trade in April-October being $17.04 billion.
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