India, Australia to start talks on FTA next month

SYDNEY: Setting a target of doubling bilateral trade in five years, India and Australia on Thursday agreed to start talks on a comprehensive free trade agreement ( FTA) in June.

Bilateral trade between the two economies was about $20 billion in 2009-10, tilted in favour of Australia because of India's need for natural resources. A free trade agreement will open up markets in goods and services and facilitate investments in both countries.

"We expect to make strong gains in services and have greater market access for goods such as pharmaceuticals," Sharma said at a joint press conference with his Australian counterpart, Craig Emerson, in Canberra.

The first round of FTA talks will be held in New Delhi next month, Commerce Minister Anand Sharma said.

India is Australia's fourth largest export market, being a heavy importer of gold, coal and copper. It is also a big contributor to Australia's lucrative foreign student market.

In the nine months to March, it had a trade deficit of A$9.6 billion with Australia.

Sharma said India's share would go up once the FTA was in place.

Both countries are expected to make substantial welfare gains from the FTA, with Australia's being slightly more than India's, according to the India-Australia joint FTA feasibility study carried out by experts from both sides.

The welfare gains could be in the range of 0.15%-1.14% of GDP for India, and 0.23%-1.17% of GDP for Australia, the study says.

"Our job is to create the right environment for business. Rest would be decided by market forces," Emerson said.

Services is one area where India is seen benefiting the most, as an FTA would offer more opportunities to Indian professionals to work in Australia. "We do expect greater access for our professionals," Sharma said.

Australia's main exports to India include coal, gold, copper, fertilisers, manganese, wool and aluminium.

India mainly exports machinery & equipment, clothing, diamonds, iron and steel products and medicines to Australia.