The removal of wool tariffs as part of the new Australia India free trade agreement could open the door for Australian Wool Innovation to explore new processing opportunities within India.
AWI CEO John Roberts told a budget estimates hearing on Tuesday night he hoped additional opportunities relating to early stage processing could be developed off the back of the signing of the interim Australia-India Economic Cooperation and Trade Agreement.
Under the deal, the 2.5 per cent tariff currently imposed on Australian wool imports into India will be slashed to zero.
India is currently Australia's third biggest international market for wool, taking a 4.6pc share of wool exports, coming in behind China's 80pc share and Italy's 5pc.
In response to questioning by Senator Perin Davey, Mr Roberts said India has typically taken between 4 to 8pc of the wool clip, at one point reaching 12pc.
"They've got a great textile culture, they know our fibre well, the formal suiting market is probably the backbone of that demand," he said.
"I think with the big push for a lot of markets to diversify their sourcing of their semi-processed wool, like wool tops particularly, India is probably a logical market.
"This reduction in the tariffs of 2.5pc can only help."
Mr Roberts described India as a "slightly closed shop at the moment, dominated by four or five key textile businesses" but the changes could mean that India could become an early stage processor for markets globally.
"I'd like to explore that opportunity, I think that's something that could be very interesting," he said.
"For me personally... I think that's probably the more exciting prospect because I think there is a finite usage in India.
"We are working on more breathable products in India because it is a warm climate as you can appreciate, there will be some growth there but I think the bigger opportunity probably exists with the re-exporting of that product from India to mills and brands globally."
Mr Roberts said he believed the existing factories in India were working at about 80 to 90pc capacity.
"I think if we talk about that re-export market that would require new machinery or the existing plants to ramp up their capacity to not only feed their own retail capacity but also to re-export early stage processed goods," he said.
"There's two opportunities there."
Start the day with all the big news in agriculture! Sign up below to receive our daily Farmonline newsletter.
Sign up for our newsletter to stay up to date.