Govt keen to strengthen CECA services pact with Australia to boost exports

India is looking at further strengthening the pact on services with Australia in the proposed compressive economic cooperation trade agreement (CECA) to boost the sector's exports, an official said on Thursday.

The two countries have already implemented an interim trade agreement in goods and services in December 2022 and are now under negotiations to expand its scope through CECA.

The next round of talks is expected in December here.

"One of the areas of interest for India is to strengthen our agreement on the services side because our services exports are doing good. So whatever we feel can be done more where India can actually improve our exports, we are looking at those areas and trying to see what else can be done," the official said.

The estimated value of service exports during April-September 2024 is $ 180 billion as compared to $ 163.92 billion in April-September 2023. In 2023-24, it was over $ 340 billion.

India is also interested in government procurement, but the country has some sensitivities in its government procurement.

"So, we have to find a fine balance in that," the official said, adding India is looking at business mobility in the CECA and migration. The last round of India-Australia CECA negotiations was held from 19-22 August in Sydney in the areas of goods, services, digital trade, government procurement, rules of origin and agri-tech.

"Efforts were made by both sides keeping in mind the domestic sensitivities for reaching a balanced outcome," the official added.

Australia is an important trading partner of India in the Oceania region, with merchandise trade between India and Australia reaching around $ 24 billion in 2023-24.

India's exports to Australia last fiscal stood at $ 7.94 billion, while imports were $ 16.15 billion. The trade between the two countries has been hovering at around $ 25 billion mark since 2021-22.

Further, the official said that the negotiating teams from the Association of Southeast Asian Nations (Asean) will hold the next round of talks here from November 19-22 to review of the existing Trade in Goods Agreement (AITIGA).

The two sides have aimed at concluding the review talks by 2025.

"Virtual discussions are going on on multiple tracks. We hope we should see some movement when they come," the official, who did not wish to be named, said.

The AITIGA was signed in 2009.

The review of the AITIGA was a long-standing demand of Indian businesses.

India is asking for a review of the agreement to eliminate barriers and misuse of the trade pact by third countries.

India's trade deficit with Asean widened from $ 4.98 billion in 2010-11, the first full year of operation of AITIGA to $ 38.4 billion in 2023-24.

India's exports to the 10-nation bloc Asean were $ 41.2 billion in 2023-24, while imports aggregated at $ 80 billion in the last fiscal.

While the rules of origin as such are not a big issue, the concerns of India stem from the fact that supply chains of Asean countries and China have become deeply integrated in the past 15 years.

As per estimates, China during this period increased its share of exports to Asean to 30 per cent from 10 per cent earlier, while India's share stagnated at 10 per cent.

Apart from trade, Chinese investments in Asean have also increased as it seeks to use these countries to export to geographies like the US and Europe where it is increasingly facing difficulties in direct exports.

China using the Asean route to misuse the trade agreement is a risk, the official said, adding that the issue is also a challenge for the grouping as Chinese investments in these countries have increased so addressing this would not be easy.

Asean members include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.