India and Australia are all set to open negotiations on free trade following a feasibility study that showed each sides would gain AUD 30 billion over 20 years from lowering barriers.
According to Australian Trade Minister Craig Emerson, preliminary talks on a deal with India would kick off next week in Canberra with his visiting Indian counterpart Anand Sharma.
The minister praised India government's formal agreement to begin negotiations on a free-trade agreement as a milestone in diplomatic relations.
"India is an enormous, rapidly expanding market for Australian businesses," he said. "Such a deal would broaden the base of merchandise trade, remove barriers to services trade, facilitate and encourage investment and address behind-the-border obstacles to trade."
While a free-trade agreement to achieve zero tariffs would be bilateral, Emerson stressed the importance of achieving trade liberalisation with India through multilateral forums.
"We have a number of negotiations that are now coming to a head, which is good," he said. The minister highlighted the importance of Australia's commodity and education exports to India.
He said Australia was particularly interested in improving the ability for services firms to operate in India, while Australian farm producers wanted improved access to Indian meat markets.
A free trade agreement with India was first canvassed under the Rudd government, with the feasibility study completed last July.
Emerson said Julia Gillard had written to her Indian counterpart Manmohan Singh to urge his backing for a trade agreement shortly after she was appointed Prime Minister.
An Indian ministerial meeting, chaired by Singh, approved a start to negotiations last Friday. It is expected that the government would expect it to take two or three years to complete such an agreement.
In 2009-10, Australia exported AUD 19.8 billion worth of goods and services to India. Exports to India have grown by 22 per cent during the past four years.
Australia already has free-trade agreements with the US, Thailand, New Zealand, Singapore and Chile. Negotiations are underway with Japan, South Korea and Malaysia.