Removal of tariffs and the expected lift in processing in India are anticipated to provide some welcome relief in a challenging market.
Australia's wool market has been having to weather the storm bought about by growing cash flow, bale dumping and shipment delays.
Furthermore, rising wages and ongoing pandemic-driven lockdowns in China has placed added pressure on the trade.
But industry experts are predicting the re-surfacing of India into the main arena on the back of the country's decision to remove its tariff on Australian wool will provide some much needed diversification.
The immediate removal of the 2.5pc tariff, under the interim Australia-India Economic Co-operation and Trade Agreement (AI-ECTA) signed in early April by then Federal trade minister Dan Tehan, stripped tariffs from 85pc of Aussie exports to India.
It will be slashed to zero by the end of this year.
At the moment, India buys around 7pc ent of Australia's wool production, ranging from the superfine to the coarser wools.
While China has long been the largest market for Australian wool, the potential for processing to increase in markets such as India and across the sub-continent is predicted to continue to grow.
And in the long-term, the zero-tariff is believed will help India become competitive in the re-export textile market, if it hasn't already.
The move came nearly 10 years after the initial Australia-India Joint Working Group initiative found India's cost-prohibitive import duty imposed on raw Australian wool was prohibiting further growth in its local textile industry.
According to the Australian Wool Exchange (AWEX) 8.2 million kilograms of greasy wool sold at live auctions was sold to India in the July to January first half of the current wool selling season.
Head of ANZ Agribusiness Michael Whitehead said the tariff coming off wool coupled with the potential for wool processing to lift in India initiates a more positive outlook for Australian wool, particularly if China starts to get challenged by continuing high costs.
"The Indian market offers huge potential, not just in terms of population size, but for the rapidly growing middle class, with evolving consumer preferences," Mr Whitehead said.
"And there looks to be a move in some of the processing operations."
Nutrien Ag Solutions south east NSW wool broker Craig Lawson said the industry is fortunate India are coming out of their pandemic situation.
"In recent times we have seen India become more active in the Australian wool market with a reasonable amount going into India," Mr Lawson said.
"It's all to do with wage structure in China. The Chinese wages are gradually getting higher and higher and in manufacturing they're all looking to save a dollar somewhere. The wage structure in India is a lot cheaper than it is in China."
I think we may very well be able to get used to this, on the back of what has happened with wages in China- Craig Lawson, Nutrien Ag Solutions
Mr Lawson said it is just what the industry needed.
"I think we may very well be able to get used to this, on the back of what has happened with wages in China," he said
"And Industry has been crying out for more diversification, so if this is the real deal it could be the beginning of something substantial in that space."
Yet the skyrocketing costs of containers continues to hinder exports for the short-term. A container from India is now $6000 compared to a pre-Covid price of $1600.
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