India likely to offer lower import tariffs on premium Australian wine

This will be part of an early harvest agreement; officials hope to finalise the interim trade pact by end of this month

India is likely to offer lower import tariffs on premium Australian wine as part of the interim trade deal that officials hope to finalise by month-end, people aware of the matter said.
 

The interim trade deal, which was being negotiated since September last year, was supposed to be finalised at the beginning of the month.
 

Both nations had earlier set a December 25 deadline but the deal couldn’t be finalised as both countries were not able to iron out disagreements on market access issues.
 

“We have readied almost everything, but some key differences have to be reconciled,” one of the persons told Business Standard. 
 

The bone of contention this time is coal, as India is reluctant to allow duty-free import of the commodity. This is mainly on the back of concerns of some revenue loss for the government. 
 

During April 2021-January 2022, India imported goods worth $13.5 billion from Australia, of which 76 per cent of the shipments are various categories of coal.

 

“Decision on coal is crucial as the majority of imports is coal. Discussions are going on and it is very easy to take a final call,” the person cited above said.
 

As far as wine is concerned, Australia will export the category of wine that will not compete with locally-produced items in India. Currently, duty on imported wine is as high as 150 per cent. “There may not be zero duty on wine, but a reduction in tax,” the official said.
 

The proposed deal is also likely to include lower tariff and greater market access for Indian exporters in areas such as textiles, pharmaceuticals, footwear and leather.
 

During the early stages, Delhi had made it clear that greater market access for contentious items such as agriculture and dairy are likely to be kept away from the deal, at least for now. This is because the move may hurt India’s small businesses, farmers and the dairy industry. 
 

Similarly, services exports is a sensitive area as far as Australia is concerned.
 

A joint statement released by both countries on Tuesday said Prime Minister Narendra Modi and his Australian counterpart Scott Morrison welcomed the considerable progress made in the Comprehensive Economic Cooperation Agreement (CECA) negotiations. 
 

“They expressed satisfaction on the large degree of convergence on many of the elements, which are close to finalisation. Leaders re-committed to an interim CECA at the earliest and worked towards a full CECA by the end of the year to enhance trade and investment ties,” the statement said.
 

In 2020, India was Australia’s seventh-largest trading partner, with two-way trade valued at $24.3 billion.  In the same year, India was Australia’s third-largest market for services exports. For India, Australia was the the15th-largest trading partner in FY21.