Currently, both countries are undertaking feasibility studies which will determine whether an FTA would be likely to improve trade and investment opportunities between them. Indian officials have found it difficult to compromise with Australia's insistence that all products under the regime become tariff-free.

Under the current proposals, Australia is angling for greater access to India's mining, agriculture and financial markets, with the possibility for both countries to inter-relate their banking systems and for India to improve its health sector by giving it greater access to Australia's more advanced medical system.

Australian officials have been keen to point out that, by making all areas of trade exempt from taxation, it is not themselves who will benefit most, but India, vastly expanding its import and export opportunities and allowing it to bolster under-developed areas of the country.

However, the Australian Federal Parliament's treaties committee has this week asked the government to ensure that it makes its objectives concerning future FTAs clearer. following complaints lodged by unions and farmers.

Further negotiations are expected to follow once the parties have completed their respective studies by end of the year.