Australia seeks Indian trade deal.

Australia and India are to push ahead with negotiations on a free trade agreement that is expected to help Canberra balance its increasing reliance on trade with east Asia, particularly China.

Simon Crean, Australia's minister for trade, said in an interview with the Financial Times during a visit to Mumbai that the deal would be "comprehensive", meaning both sides would agree to open their sensitive agriculture markets as well as goods and services and investment.

"This has been a very underdone relationship for us," Mr Crean said of trade with India.

India has risen from a low base to become Australia's fastest growing two-way trading partner, with the flow of goods and services between the pair reaching nearly A$22bn ($19.9bn, £13.1bn, €18.7bn) in the year ended June 30 2009, up 55 per cent over a year earlier.

Australia began to trade more closely with Asia two decades ago, focusing on China, which is its biggest trading partner in a bilateral relationship that is expected to top A$100bn in the year ended June 30 2010.

The partnership with China helped Australia to ride out the global economic downturn, with trade rising 30 per cent to A$83bn the previous year.

Now Australia is seeking to replicate that success with India. Mr Crean and India's minister of commerce and industry, Anand Sharma, this week accepted a feasibility study on a free trade agreement between the two nations.

Mr Crean said yesterday the two countries had agreed to begin talks on the agreement, although he said it was difficult at this stage to give a timetable.

"When you look at the growth in the commercial relationship over the last three or four years you can see that there's more than interest, there's a naturalness to it, there's a dynamic there," he said.

According to the free trade feasibility study, an agreement between India and Australia to liberalise trade could add a net US$32bn to Australia's gross domestic product and US$34bn to India's during the next 20 years, or potentially more than 1 percentage point each of GDP.

Australia's exports to India have risen by an annual average of 25 per cent over the past five years. India is Australia's fourth biggest export market, up from 13th a decade ago.

Natural resources in the case of Australia and information technology services from India would be an important source of growth.

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Source : FT.COM