India trade deal stalled but not dead

However, he believes the potential to strike a final agreement remains strong due to the high level of good-will established between the two trading partners in recent years.

And the one-time Liberal MP and National Farmers’ Federation Executive Director also says any agreement will carry great opportunity for Australia to provide specialised services to India that can enhance domestic agricultural production, like irrigation and water-use efficiency.

But selling Australian farm goods into the potentially lucrative food market will require a two-step process where an initial trade deal would open the door to sell non-competing products, like sheep-meat, valued-added dairy and wine.

Mr Robb was the Coalition government’s Trade and Investment Minister following the 2013 election where he helped drive negotiations to try and conclude a Comprehensive Economic Cooperation Agreement (CECA) with India by the end of 2015.

In early 2016, he was replaced by Steven Ciobo in that role and then, ahead of his resignation at last year’s federal election, took up a trade envoy’s position.

In that position Mr Robb continued talks on a trade agreement with India, to potentially add to his heralded achievements concluding deals with China, Korea, Japan and the Trans Pacific Partnership which also cut tariff barriers for major Australian farm exports like beef, grains and dairy.

This week, Australian Prime Minister Malcolm Turnbull visited India where trade between the two nations was again a core focus of the leadership talks, to try and breathe life into the stalled negotiations.

Mr Turnbull said the CECA remained on the agenda and he and Indian Prime Minister Narendra Modi planned to re-engage the process - but they remained coy on setting any more deadlines for a conclusion.

“We had a very good discussion about the CECA - and I think it is fair to say that we feel that progress has not been as fast as either of us would like it to be,” Mr Turnbull said.

“Our trading relationship is delivering significant benefits to our respective nations.

“Last year two-way trade in goods and services was nearly $20 billion - more than double what it was a decade ago - but given the complementarities of our two economies, this is a fraction of the level it could and should be.

“Now we are working with India to secure timely conclusion of a quality Regional Comprehensive Economic Partnership, the RCEP, which would provide a significant boost to regional confidence.”

Mr Robb said he sensed a trade deal with India came “very close, to be honest” to being signed, during his tenure as the federal Trade Minister.

“We got down to 20 issues and a lot of them were not deal breakers in any sense,” he said.

Mr Robb said the page of 20 issues could have been resolved, if there had of been the will, particularly by the bureaucracy in India, to sit down and hold further talks on what were “really political issues at that stage”.

“In the end, I faced a lot of resistance; not from the political side of things or the Prime Minister there - he was very enthusiastic - but the bureaucracy was never keen,” he said.

“They’ve been in a special position for 60 years and things are changing but not quickly enough in terms of getting that deal done – but we got very close.

“A couple of days of just going through and making political decisions about a range of issues would have sealed it.”

But Mr Robb said if and when a trade deal was signed, it would have “a profound influence” on trade and business, between Australia and India.

“We have a very big Indian diaspora now and so many of them are keen to assist trade between our two countries and I’m helping some of them now on an education front,” he said.

“In agriculture, there are so many opportunities for services and farm practices and a lot of the service industries like fertilisers - all of the farm inputs and the knowledge of when and how to use them, like farm management and genetics, water management and irrigation.

“We have world leading irrigation practices and India needs that because they have a lot of pollution and where they have water they need efficient use of the water, so the technology needs to be applied.

“All of those areas are ripe for the picking and India would engage very quickly, in many of those states in India, if we can get a deal signed.”

But Mr Robb said trading Australian farm products into India was more of a challenge in concluding a deal.

“It’s more difficult than China in many ways because there are 600 million people in India on less than $2 a day and there are some staple agricultural products (like crops) that those people rely on at the moment, to make a meagre living,” he said.

But he said there was strong opportunity for trading farm products that don’t compete against the Indian market, like sheepmeat and value added dairy.

“You see very little cheese and food products like that being consumed in India - but it’s starting to come,” he said.

“There are 150 million people there in the middle class now and they have standards of living that are not much different to our own and in some cases better.

“So you’re seeing more chesses and yoghurts and those types of value added products which we’re good at and which we would not be competing against India on because their dairy industry isn’t into that space at the moment.

“And then there’s wine – we would not be competing on wine - so there’s a number of fronts that could be opened up immediately, without necessarily covering a comprehensive agricultural access agreement.”

Mr Robb said the plan during his tenure was to make the most of the non-competing farm products in stage one of a trade agreement and then in stage two, progressively over time, start to address existing barriers to the trade for other agricultural commodities.

“President Modi kept saying he was keen to have access to Australia’s expertise, to help India reach its full potential,” he said.

“What he meant was, he wanted access to hundreds of our service-skills because we’re seen as having world-class skills in health, education, engineering, financial services, water management, agricultural production, architectural design - you name it,.

“There’s room for Australian expertise to make a big contribution across the board and to take our intellectual property and join forces with Indian companies.

“The service opportunities are immediately available and so are some of the farm products like sheep meat, value-added dairy and wine.”

Mr Robb said the trade deal with India “got very close, but we ran out of time” as both trading partners originally had agreed to complete it by Christmas 2015.

He said after leaving the ministry in early 2016, he continued holding diplomatic talks and had three more official visits to India which made it nine trips during his last 18 months in federal parliament.

But “a lot of good will” remains, because of that process, he said.

“There’s still a significant body of good will towards us so I think when they get the first opportunity to re-engage, our government won’t be wasting its time,” he said.

This week, Mr Turnbull said Australia and India had now asked their chief negotiators to schedule an early meeting to get the process moving again, to conclude a trade deal.

He said both leaders had a “very practical discussion” about the CECA and conceded “there hasn’t been enough progress on that”.

“There is a long tradition of protectionism in India and the Indian governmental system I would say hasn’t been as enthusiastic about it as perhaps we in Australia would’ve liked,” he said.

“But Prime Minister Modi and I had a very good frank discussion about that and we both agreed that progress hadn’t been good enough.

“We’ve both directed our chief negotiators to reconvene as soon as possible and we’ve directed them to set out, to tabulate exactly what the asks are, what the ambitions are in respect of each side so that they can then report back to us and we can see how close, or our far apart the two negotiating teams are and what can be done to bridge those gaps.”

Mr Turnbull said neither of the two trading partners would do a trade deal that wasn’t any good, “so this is not a deal at any price”.

“But what is not acceptable to either Prime Minister Modi or myself is people not getting together and getting down to tin tacks,” he said.

“That doesn’t guarantee that a deal will be concluded, of course, but what it means is we will get on, we’ve got to get on with it.

“There’s a difference between talking about doing a deal and doing a deal and we’ve got to move into the second part of the equation.”

In his address to the India Australia business dinner in Mumbai, Mr Turnbull said Australian agriculture can help support India’s food security and help transform it into a global processing and exporting hub in areas like dhal from pulses.

During the visit, he also told media India was defying its skeptics and had delivered a growth rate that was equally the “wonder of the world, recognising that opening markets, deregulation, enabling businesses and individuals to pursue their own dreams, their own freedom,  is the way to deliver the prosperity upon which all depends”.

He said Australia also had the resources and expertise to make a “very substantial” contribution to India’s growth and development.

“Spanning education, training, science and innovation, our dynamic and growing knowledge partnership can be truly transformative,” he said.

“Our deepening collaboration on water management is supporting your National Water Policy by improving river basin planning and management, hydrological modelling and sustainable water use.

“And I might say the management of water resources in India has been a passion of several prime ministers of Australia including one of our earliest, Alfred Deakin who made a study of the irrigation system in India a particular focus of his as he took learnings from that and set up the irrigation models for Australia.”

This week, Mr Ciobo said the government wanted to ensure it implemented “really good trade deals” and wasn’t just “racing - to get them done” and had to ensure he was “promoting Australia's national interest”.

He said the RCEP looked to be the best vehicle to take Australia's national interest forward and involved 16 ASEAN countries plus Australia, NZ, China and India.

“It’s more than more of 50 per cent of global population, more than 30pc of global GDP – that is a concrete pathway forward for Australia and it runs in parallel to the work that I'm doing with, for example Indonesia,” he said.

“I’m making sure we put in place a comprehensive economic partnership with them before the end of the year.”

An ABARES 2014 report analysing India's food demand out to 2050 said its population was expected to increase from 1.2 billion in 2010 to about 1.6 billion in 2050 and the nature of food demand would depend on factors like income growth, urbanisation and the Indian government’s policy direction.

It said India had been one of the world's fastest growing economies over the past 20 years which “mainly reflects government reforms to support economic activity and increase the openness of the economy to global markets”.

“It has brought with it rising household incomes and a gradual increase in the proportion of the population living in urban centres, trends that are projected to continue to 2050,” the report said.

“As a result, consumption of agrifood products has been rising and is projected to more than double between 2009 and 2050.

“Indian consumers are not only demanding more food but a wider variety of foods.

“To meet increased demand the Indian agrifood sector needs to contend with the challenges of increasing its production and productivity growth.

“The Indian government's continued commitment to agricultural investment will be required to further mitigate or overcome the persistent challenges of a deteriorating resource base and rising costs of intermediate inputs and transport.”

In applying a business-as-usual policy environment analysis, where no changes to India's existing policy settings were assumed, the report said the real value of India's agrifood production was projected to more than double from US$283.3b in 2009 to US$574.6b in 2050.

“This increase is driven by higher production of beef (up 179pc), rice (162pc), fruit (113pc), vegetables (107pc) and dairy products (88pc),” the report said.

“In 2050, imports of vegetables and dairy products are projected to be around US$47b and US$12.7b, respectively, compared with negligible vegetable or dairy trade in 2009.

“Imports of fruit are projected to be around US$58.2b in 2050, compared with exports of US$0.9b in 2009.

“For wheat, the value of imports is expected to increase by 395pc by 2050, to US$14.8b, which would increase the import share of wheat consumption from 16pc in 2009 to 55pc in 2050.”

The report said India was the world's largest exporter of carabeef (mostly buffalo) which was expected to continue to 2050.

“For meat products, as well as rice, maize and sugar, the rise in consumption by 2050 is projected to be met largely by a rise in domestic production, with imports playing a minor role, mainly for high quality niche markets,” it said.

The ABARES analysis said the consumption of meat products was projected to rise “modestly” between 2009 and 2050, albeit from a low base given the predominately vegetarian population.

“Over this period, consumption of beef is projected to rise to US$19.4b and sheep and goat meat to US$3.2b,” it said.

“Sugar consumption is projected to rise by 36pc to US$20b.”