Australia and India have signed a landmark free-trade deal at a time when both nations are desperate to diversify their economic dependence on China.
The Australian government said that tariffs would be eliminated on more than 85% of Australian exports to India from day one, covering a broad range of products across commodities, agriculture, discretionary and pharmaceuticals.
Likewise, India will be offering zero-duty access across 96% of imports entering Australia.
“This agreement opens a big door into the world’s fastest growing major economy for Australian farmers, manufacturers, producers and so many more,” the Prime Minister said.
"This is great news for lobster fishers in Tasmania, wine producers in South Australia, macadamia farmers in Queensland, critical minerals miners in Western Australia, lamb farmers from New South Wales, wool producers from Victoria and metallic ore producers from the Northern Territory."
India will provide duty concessions to Australian wines in a phased manner over 10-years.
Wine with a minimum import price of US$5 per bottle will be reduced from 150% to 100% on day one
Reducing up to 50% over 10-years
Wine with minimum import price of US$15 per bottle will be reduced from 150% to 75% on day one
Reducing up to $50% over 10-years
Treasury Wine Estates (ASX: TWE) is the main name that comes to mind. The company was forced to exit out of China after Beijing imposed a crippling 107% to 200% import tax on all Australian wine.
While Treasury Wine has not mentioned any Indian operations in recent announcements, the company has been growing its global distribution network across Asia (ex-China), Europe and North America.
Australian coal imports to India account for approximately 70% of total imports. India will now be eliminating a 2.5% duty on Australian coal.
This is another accommodative policy for an already supply-tight coal market.
Fruits and vegetables
The Australian government noted several benefits for agriculture including:
Tariffs up to 30 per cent on avocados, onions, broad, kidney and adzuki beans, cherries, shelled pistachios, macadamias, cashews in-shell, blueberries, raspberries, blackberries, currants will be eliminated over seven years
Tariffs on almonds, lentils, oranges, mandarins, pears, apricots and strawberries will be reduced, improving opportunities for Australia’s horticulture industry to supply India’s growing food demand
Costa Group (ASX: CGC) has a tiny exposure for fruit sales in India. The company has expressed its intentions to leverage the growing Asian middle class.
"The current and projected growth of the middle class in China, the per capita growth in European berry consumption and the opportunities presented by emerging regions, such as India, means Costa is well positioned to benefit as we further invest in growing our international operations,” said CEO Sean Hallahan.
Finance Writer & Social Media
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