Indian and Australian companies may be able to bid in each other’s central government tenders as the bilateral Economic Cooperation and Trade Agreement (ECTA) provides for negotiations, in a chapter on government procurement, to begin in the next 75 days. Officials said India is likely to get access to about $10 billion worth of Australia’s official procurement, pegged at $60-65 billion annually.

According to the trade pact signed on Friday, a chapter on digital trade will also be negotiated soon. The commerce and industry ministry will begin talks with other ministries on the issue, said officials. “Within 75 days after the date of signature of this agreement, the negotiation subcommittee shall commence negotiations on amendments to this agreement,” said the ECTA.

Comprehensive Economic Cooperation Agreement

This will be “on a without prejudice basis in areas including inter alia market access for goods and services, a complete product specific rules schedule, a digital trade chapter and a government procurement chapter, to transform this agreement into a Comprehensive Economic Cooperation Agreement,” said the ECTA.

The two sides will establish a negotiation subcommittee comprising government representatives for the purpose.

“Australia has an MSME (micro, small and medium enterprises) order under which their government procurement is protected, similar to India’s public procurement (preference to Make in India) order,” said an official, who did not wish to be identified. Moreover, defence is a large part of the $60-65 billion that is not covered in the ECTA, the official said, explaining that likely gains for India could be in the remaining $10 billion government procurement market.

Services Trade

Australia agreed to amend its tax law to stop the taxation of offshore income of Indian firms providing technical services in the country. “This was a long-standing demand of our IT industry that has been met,” said the official.

To liberalise services trade, the agreement provides for a transition to a ‘negative list’ wherein India would have to state the exceptions to services it wants to open up, from a ‘positive’ list where it spells out the services it can liberalise. “The world is moving to a negative list and that’s how most developed countries negotiate,” said the official.

Similar provisions are there in the Regional Comprehensive Economic Partnership agreement, of which Australia is a member. “This will be a huge exercise, as the Centre would have to consult every state on their measures, such as regulations, related to services,” said an expert on trade issues, who did not wish to be identified. All services excluded by the states would be put on the negative list.

Agri and Wines

Australia and India have agreed to undertake cooperation to promote agricultural trade as part of the pact and will now work toward concluding an enhanced agricultural memorandum of understanding (MoU), though there is no direct reference of this in the agreement. “Since Australia’s per unit productivity is higher than ours, the MoU with the agriculture ministry will focus on tech technology and research,” said the official.

The pact also provides for duty concessions on wines that would attract investment in India. Industry executives said India’s decision to reduce duty on Australian wine will give consumers high-quality premium brands and bring in price rationalisation.