A ground-breaking free trade agreement has commenced on 29 December 2022 with India – removing tariffs on a vast majority of local exports and tearing down trade barriers – set to deliver a billion-dollar boost to South Australian businesses.
The new deal immediately cuts tariffs on 85 per cent of Australia’s exports to India – including lentils, lobsters and sheepmeat and wool – rising to nearly 91 per cent over 10 years. It also significantly reduces tariffs on a further 5 per cent of goods such as wine, fruit and nuts.
Australian exporters will save around $2 billion a year in tariffs under the Australia-India Economic Cooperation and Trade Agreement, which is expected to increase exports to India to about $45 billion by 2035 – providing a huge boost to SA companies and helping create local jobs.
India is the state’s fourth largest merchandise export market, worth nearly $1 billion – and growing this market will open up new ways for farmers, producers and manufacturers to capitalise on one of the world’s fastest-growing economies.
South Australian winemakers are toasting the deal, with tariffs slashed today on premium wine – falling from 150 to 75 per cent for bottles over US$15 and 150 to 100 per cent for bottles over US$5. Further staged tariff reductions of 5 per cent each year will then follow over the next decade.
The heavily reduced tariffs will fuel continual growth of SA’s wine exports to India, totalling $13.5 million for the year ending October 2022 – up 31 per cent on the same time last year.
Diversifying export markets is an important step for the industry, which has been hit hard by changed trade conditions with China, pressure on global shipping prices and the impact of COVID-19.
India is South Australia’s 30th largest export market for wine, with wine consumption expected to nearly double by 2025 due to the country’s rising middle class.
The new trade agreement will also be a big win for consumers, delivering about $500 million in savings for tariffs on imports of finished goods as well as inputs to Australia’s manufacturing sector.