India and Australia formally signed an interim free trade deal on 2 April. The deal is not only going to improve economic ties between the countries, but it will also generally strengthen bilateral ties.
India’s Minister of Commerce & Industry, Piyush Goyal, and his Australian counterpart Trade Minister Dan Tehan signed the Australia-India Economic Cooperation and Trade Agreement in a virtual ceremony
Indian Prime Minister Narendra Modi and Australian Prime Minister Scott Morrison also participated in the virtual ceremony. India and Australia have been negotiating for almost a decade.
Prime Minister Morrison, who is going to call for a general election soon, is likely to use this deal to woo voters.
Morrison, welcomed the signing of the deal, as it opens the doors of the second most populous and one of the biggest economies in the world.
“These are never all or nothing deals as far as we’re concerned, we see all of these as the next step and the next step and the next step,” the Aussie Prime Minister said.
The Australian government is looking to diversify its export markets and bring down its dependence on China, which is also its current biggest trading partner. In recent years, Australia and China have been engaged in diplomatic spats leading Beijing to impose sanctions against some Australian products.
Under this agreement, 96% of Indian goods will enter Australia duty-free. Whereas India reduced tariffs on 85% of Australian goods entering India.
India will scrap tariffs on the following Australian items: sheep meat, wool, copper, coal, alumina, fresh rock lobster, and some critical minerals and non-ferrous metals.
India and Australia will continue to work towards a full free trade agreement.
Post signing the deal, the Indian Minister of Commerce & Industry Goyal said India wanted to progress a full free trade agreement with Australia in an “accelerated manner”.
“Soon after this current agreement comes into force, we’ll get down to cracking the whip on the next stage to make this a comprehensive economic partnership,” Goyal said.
His Australian counterpart said he was confident negotiations would advance even if the Morrison government was replaced at the upcoming national election.
Australia goes to poll in May this year. So far opinion polls show Morrison as lagging.