NEW DELHI: India and Australia signed an interim free trade deal on Saturday that cuts tariffs on billions of dollars of commerce as the two Quad partners bolster their economic ties.
Both signatories are members of the Quad alliance with the United States and Japan, which is seen as a counterweight to an increasingly assertive China.
But while they both border the Indian Ocean, Canberra says India was only Australia’s seventh-largest trading partner in 2020, and accounted for just over four percent of its exports last year. The Economic Cooperation and Trade Agreement was signed simultaneously in New Delhi and Canberra by India’s commerce minister Piyush Goyal and his Australian counterpart Dan Tehan in a joint ceremony.
India and Australia are “natural partners, connected by shared values of democracy, rule of law and transparency”, Goyal said. “Our relationship rests on the pillars of trust and reliability aptly reflected in our deepening geo-strategic engagement through the QUAD and the supply chain resilience initiative.”
Two-way trade reached around $27.5 billion last year according to New Delhi, with resource-rich Australia exporting coal and other commodities, along with sheep meat, and India largely supplying finished goods and services.
At the same time Canberra’s relations with its biggest trading partner China are at their lowest point in a generation, with many Australian goods hit with punitive sanctions and ministerial relations frozen.
Beijing 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.
India and China have also seen a sharp deterioration in ties after a high-altitude clash in 2020 left 20 Indian soldiers and at least four Chinese soldiers dead.
The agreement “delivers a clear message that democracies are working together and ensuring the security and resilience of our supply chains”, Australian Prime Minister Scott Morrison said at Saturday’s signing.
India’s Prime Minister Narendra Modi added it would “contribute to increasing supply chain resilience and to the stability of the Indo-Pacific region”. Negotiations on a comprehensive deal between India and Australia were launched more than a decade ago but stalled in 2015.