While there is possibility of a trade deal to soon be established with the United States, India has rejected Australia’s push for deeper tariff cuts on dairy and alcohol, which will hamper efforts to conclude the second phase of a trade pact by the end of the year, two Indian government sources said.
Interim Trade Pact
An interim trade pact which was signed in 2022 lowered tariffs on a range of goods, but since then negotiations on a broader Comprehensive Economic Cooperation Agreement (CECA) covering goods, services and visas have slowed, with dairy and wine emerging as key sticking points, a Reuters report said.
India is refusing to concede on politically sensitive dairy and agriculture products, which reflects mounting pressure from powerful farm groups, which is also shaping trade talks with other partners, including the United States.
“There is no question of agreeing to Australia’s demands for further tariff cuts on dairy and wine,” a senior Indian official with direct knowledge of the talks with Australia was cited by Reuters.
“It could have an impact on millions of farmers and our nascent wine industry and grape producers,” the official added.
Who Is Opposing?
Among the ones to oppose the concessions are farmer groups and politicians from Prime Minister Narendra Modi’s home state Gujarat and grape-growing Maharashtra, along with the $35 billion alcoholic beverages industry.
How Have The Prices Been Affected?
Under the interim pact, tariffs on Australian wine which is priced above $5 per 750 ml bottle were cut to 100% from 150%, with a provision of a reduction to 50% over 10 years, whereas for bottles priced at over $15,tariffs have dropped to 75%, with a target of 25% in a decade.
What Is Australia’s Stance?
Australia is now pushing to accelerate these cuts and gain better access for dairy products, which includes items like cheese, high-protein whey concentrate, lactose and processed items. These are currently taxed between 20% to 30%.
While noting that the rise in demand could benefit both Indian as well as Australian winemakers because they make different products, Lee McLean, the CEO of the industry body Australian Grape & Wine said, “We’d like to see a reduction in the price at which tariff reductions kick in and a speeding up of those reductions.”
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