Slowing growth in top trade partner China and plunging prices for iron ore and coal are adding impetus to Australian efforts to secure a free trade deal with India by the end of the year.
Officials are meeting in Canberra this week, a source familiar with the talks said, the second round of official discussions since Prime Minister Tony Abbott and his Indian counterpart Narendra Modi agreed in November to accelerate long-running but slow-moving negotiations.
"Obviously things have slowed down on the iron ore and coal front, particularly from China, but we're confident there's going to be a strong phase of demand and growth coming out of India for coal and iron ore and also the arrangement to sell them uranium," said the source, who asked not to be identified because the talks have not been made public.
An agreement with India would cap an unprecedented two years for Australian trade negotiators, who have reached landmark free trade deals with China, Japan and South Korea.
Australia's Foreign Minister Julie Bishop is currently in India to advance a Civil Nuclear Cooperation Agreement that has been in discussion since Australia lifted a long-standing ban on selling uranium to energy-starved India more than two years ago.
Trade between Australia and India stands at around $15 billion a year, or just a tenth of that between Australia and China.
But with growth in China slowing to its weakest in six years and prices at multi-year lows for iron ore and coal, Australia's top two exports, Canberra is keen to diversify both markets and products.
"We think there is the prospect for market openings particularly for Australia to provide premium agricultural and food goods, similar to China but probably 10 years behind," the source said.
India is seeking liberalisation of investment and better access for its low-cost, labour intensive manufactured goods and components.
Trade Minister Andrew Robb, who led Australia's largest ever trade mission to India in January, heads to India next week and another round of talks is planned for June.
"To conclude by the end of the year, it's realistic, but it's challenging," said the source.
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