NEW DELHI, Dec 29
India may sign a comprehensive trade deal with Australia only after the conclusion of the 2024 general elections as the latter is seeking access to the domestic agriculture market — a politically sensitive issue — a senior government official indicated Friday.
Both countries signed an interim trade deal last year in December as part of which India extended limited commitments in agriculture by eliminating duties on avocados, certain peas and beans, onions, leeks, asparagus and cherries, among other items. Australia, however, is seeking more access to the Indian agricultural market.
“The government is reluctant to commit anything involving the agriculture sector. General elections are also around the corner.
And Australia has a significant population involved in agriculture.
They have demands there. Several countries are seeking commitments in the agri sector such as the UK and the European Union,” said the official, requesting anonymity.
Sensitivity towards market access in agriculture could be a major bone of contention for both countries going forward as farmer groups yield considerable influence both in India and Australia — Australia, earlier this year, rejected European Union proposals for a free trade agreement and India avoided joining the trade pillar of Indo-Pacific Economic Framework for Prosperity.
While New Delhi has kept most agriculture and dairy sectors insulated from trade deals, it had opened the wine market for the first time to Australia in the Australia-India Economic Cooperation and Trade Agreement (ECTA) signed last year. Government officials, however, said Australia’s exports of wines in India have not seen a major surge in the last 12 months. For wine bottles over $5, India agreed to immediately cut import duties to 100 per cent from 150 per cent and phase it to 50 per cent over nine years. In case of wine bottles over $15, import duties were immediately slashed to 75 per cent from 150 per cent with a commitment to phase it to 25 per cent over nine years.
“India’s agriculture sector is politically sensitive with a protectionist sentiment that is unlikely to fade. The central and state governments seek to balance smallholder and consumer needs with the broader goals of minimising social disruption and maximising electoral rural support,” Australia’s department of foreign trade had said.
“So India will remain a difficult market, prone to fluctuating import demand and sharp policy changes – hedging against this volatility is part of spreading risk. But there is scope for it to become more predictable,” it had said.
