Australia and India will sign a free trade deal on Saturday, with Canberra touting the agreement as “historic”, cutting tariffs on more than 85 percent of Australian exports to the country.
In a step toward a more extensive Comprehensive Economic Cooperation Agreement, Canberra and New Delhi will sign the interim deal in the afternoon, which is expected to affect about Aus$12.6 billion ($9.4 billion) in exports.
Highlighting several products hit hard by an ongoing trade dispute with China, such as coal, wine and rock lobsters, Australian Prime Minister Scott Morrison said the interim deal was a boon to local producers.
“This agreement opens a big door into the world’s fastest-growing major economy for Australian farmers, manufacturers, producers, and so many more,” Morrison said in a statement.
The cut to tariffs would also impact sheep meat exports, wool, coal and certain critical minerals.
India was Australia’s seventh-largest trading partner and sixth-largest export market in 2020, accounting for just over four percent of exports last year.
Bilateral trade was around Aus$24 billion ($17 billion) last year, with India exporting its key services sector and Australian coal going the other way.
Both are members of the Quad alliance with the United States and Japan, and are looking to deepen strategic ties to counter China.
Negotiations on a comprehensive deal between India and Australia were launched more than a decade ago but stalled in 2015.
Australian trade minister Dan Tehan said the deal was “laying the foundations for a full free trade agreement”.
The announcement comes as Morrison’s conservative government trails in the polls ahead of an election in May. Heightened tensions with the country’s biggest trading partner, China, is a vital issue.
Relations between Beijing and Canberra are at their lowest point in a generation, as many Australian goods are slugged with punitive sanctions and ministerial relations frozen.
China has been angered at Australia’s willingness to legislate against overseas influence operations, to bar Huawei from 5G contracts and to call for an independent investigation into the origins of the coronavirus pandemic.
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