India has refused to lower import taxes (tariffs) on dairy and alcoholic drinks like wine, as requested by Australia. This has delayed the second phase of a planned trade agreement between the two countries, according to government sources.
India and Australia had signed an initial trade deal in 2022, which reduced tariffs on many products. But talks for a full trade agreement—called the Comprehensive Economic Cooperation Agreement (CECA)—have been stuck. The main disagreements are about dairy and wine imports.
A senior Indian official involved in the discussions said, “We cannot agree to Australia’s request for more tariff cuts on dairy and wine.” The reason: lowering tariffs could hurt millions of Indian farmers and local businesses, especially in states like Gujarat and Maharashtra, where grapes and dairy farming are important.
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What Australia Wants:
- Faster and deeper cuts to tariffs on Australian wine.
- Lower price thresholds so cheaper Australian wines also benefit from lower taxes.
- More access to the Indian dairy market for items like cheese, whey protein, and lactose.
Currently, under the 2022 deal:
- Tariffs on Australian wine over $5 per bottle dropped from 150% to 100% and are supposed to go down to 50% in 10 years.
- For wine over $15, the tariffs dropped to 75%, with a target of 25% in the same period.
However, Australian wine producers say their products still cost too much in India because of high taxes. For example, a bottle that costs A$10-15 in Australia can cost over A$100 ($65) in India.
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On Dairy:
Australia wants better access for products like cheese and protein-rich whey, which currently face high Indian import taxes. But India’s dairy industry is very large and sensitive politically, so the government is unwilling to make changes that could hurt local farmers.
Despite the disagreements, both countries still want to move forward with the trade deal. India is ready to lower tariffs on industrial and non-agricultural items, and in return, wants better access to Australia’s service sector and more visa opportunities for Indians.
Australia’s government also says both Prime Ministers support the trade deal and believe it can strengthen the economic relationship between the two nations.
