Australia-India Economic Cooperation and Trade Agreement (AI-ECTA) was ratified by the Australian Parliament on 23 November 2022.
This Agreement has been a long time coming. Australia and India launched negotiations for a Comprehensive Economic Cooperation Agreement in
May 2011. Negotiations were suspended in 2016 due to other multilateral regional negotiations. In 2020 both nations re-engaged in bilateral discussions.
India is an attractive market for Australian grain growers and the industry continues to look for opportunities to diversify to find new customers and manage risks in existing markets. An agreement with India provides certainty for Indian consumers, for when the country is unable to satisfy their own demands imported high quality grains will be needed. It’s disappointing to see growth opportunities and strengthening food security goals not achieved in this interim agreement.
A mutually beneficial agreement for Australian grain growers and the Indian industry had real potential. Certainty of market access for Australian growers supports India’s food security goals; the benefits of chickpeas include being a steady source of human nutrition. The agreement offers some potential benefits for Australian lentils, and over time will see benefit for faba beans, canola oil and soybeans however it is largely “business as usual” for the grains sector’s trading partnership with the Indian people.
GrainGrowers acknowledges the work of Minister Farrell, as well as former Minister Tehan, Chief Negotiator Frances Lisson and colleagues. We hope that continued engagement in the next phase of the agreement sees for further market access opportunities.
From here Australia and India will continue negotiations with the anticipated full agreement to be finalised as soon as possible.
Why is India strategically important for Australian Grains industry?
Currently, India has the second largest population in the world, with a growth rate expected to put it above China as the most populous country by around 2031. Along with population growth comes trends in consumption that present opportunities for the Australian grains industry. These opportunities aren’t isolated to the export of grain, but also potential RD&E and logistics developments in India that would support the country’s agenda for job growth, improved food security and capacity building of their grains sector. All these dynamics means that India is an important market of the Australian grain industry and economy.
- India has a large and growing population, with an increasingly foreign lifestyle and diet;
- India’s domestic grain supply chain can be variable and in combination with growing population, imports are increasingly important for their food supply and security;
- There is a logistical advantage that can benefit both India and Australia, especially to southern India;
- India is the world’s largest pulse market, and improved access can deliver increased profitability to Australian grain growers as well as sustainability outcomes because of the multiple benefits pulse crops provide such as disease breaks and improved soil fertility; and
- The greater the number of markets to which we can competitively sell Australian grain, the lower our industry’s market risk.
What is an ECTA and how is it different to an FTA?
Trade agreements are a pact between two or more countries for specific terms of trade, commerce, transit or investment. There are several types of agreements which mostly involve mutually beneficial concessions. A ECTA generally covers negotiations on trade tariffs and quota rates only. It is not as comprehensive or strong as a full FTA which seeks to provide preferential trade terms and tariff concessions.
Summary of Key Outcomes of Agreement
• Barley and Oats: tariffs bound at 0 per cent on entry into force
• Lentils: Immediate 50% tariff reduction to a quota of 150,000 tonnes per year.
Opportunities to be realised
It’s disappointing to see major growth opportunities and strengthening food security goals (greater certainty of trade between Australia and India on key grain and pulse products) not achieved in this interim agreement, with the exclusion of some products.
While domestic production of chickpeas in India is currently strong, there will be periods where seasonal conditions can’t meet demand and a need to look to trading partners with quality chickpeas.
What is next?
Negotiations for a full free trade agreement will commence next year.