India and Australia are soon likely to initiate talks for a free trade agreement.

"We are in the initial phase of looking at the prospect of a free trade agreement with Australia. A joint study group, likely to be formed within this year, will look at the sectors that could benefit from such an agreement," a commerce ministry official said on Monday.

The Australian government had last week given its go-ahead to hold talks for the pact. This comes days after the Australian government cleared a proposal to sell uranium for India's nuclear power reactors.

The commerce ministry is now likely to send a formal request for setting up the group to the Prime Minister's Trade and Economic Relations Committee. "Negotiations will start after the study group's nod. Usually, negotiations for free trade agreements takes two years," the official added.

Australia has been enjoying a healthy trade balance with India. During 2006-07, India exported merchandise goods worth $924.64 million, a growth of 48 per cent over the previous fiscal. Imports from Australia in 2006-07 stood at $6.83 billion, a growth of 38.16 per cent over the previous year.

India is negotiating similar agreements involving goods, services and investment with Sri Lanka and Thailand with whom it already has free trade agreements. The country is also negotiating FTAs with the Asean countries and Japan.