India-Australia Relations

RISING SUN

Senior member
Dec 3, 2017
14,402
6,409

RISING SUN

Senior member
Dec 3, 2017
14,402
6,409
Why India and why now?

Australian business has long put India in the 'too hard' basket. There are three overriding reasons why this must change: scale, complementary economies and spreading risk.

For Australian companies with a global focus the key question is whether they can afford not to be in what is the fastest growing large economy in the world.

India's scale is extraordinary. By 2025, one-fifth of the world's working age population will be Indian. By 2030 there will be over 850 million internet users in India. By 2035 India's five largest cities will have economies of comparable size to middle income countries today.

There is no market over the next 20 years which offers more growth opportunities for Australian business than India. The targets set out in this report would see Australian exports to India grow from $14.9 billion in 2017 to around $45 billion measured in today's dollars, and outward Australian investment to India rise from $10.3 billion to over the $100 billion mark, reflecting a transformational expansion of the relationship. That is the size of the opportunity and the key lesson for Australia of India's scale, the momentum which is already built into its growth trajectory and the underlying complementarity between our two economies.

The opportunities however will not fall into our lap. They require a sharper national focus on India by government, an unambiguous commitment by Australian business and a deeper understanding by both government and business of the magnitude of what is unfolding in an Indian market place which will only get more crowded. They will also require an approach to the investment relationship with India that markedly differs from the trajectory of Australian investment in most other Asian markets.

This report has a simple message. The transformation of the Indian economy is underway. Its progress will be uneven but the direction is clear and irreversible. To realise the opportunities this opens up, we need as a country to make a strategic investment in India which is backed up with an ambitious, long term and multidimensional Australian strategy driven at the highest levels of the Australian Government.

Australia should set itself the goal by 2035 to lift India into its top three export markets, to make it the third largest destination in Asia for Australian outward investment, and to bring it into the inner circle of Australia's strategic partnerships and with people to people ties as close as any in Asia.

The long view: patience, perspective and preparation​


What follows is a deliberately long term perspective about Australia and India: out to 2035.

A strategy with this time horizon has to try and capture not just how India will change over the next 20 years but also shifts in the Australian economy. We are today poised globally at the edge of a revolution in technology. Artificial intelligence, big data, machine learning and other innovations will likely change the nature of work and the productivity of both the Australian and Indian economies. So looking out to 2035 means plotting the points of intersection of two moving parts.

A long view is important for any strategy. For India it is essential. India is a market which requires patience, perspective and preparation. Change in India is often invisible to the naked eye. That is one reason why perceptions of India in the Australian business community are caught in a time warp: largely unaware of the significant positive changes taking place in India and shaped by a 'once bitten twice shy' perspective.

The opening up of the Indian economy is a good example. Australian business still tends to think of the Indian economy as relatively closed. Yet the Indian economy of today is very different to the days of the license raj. And the Indian economy of 2035 will be different again.

India's average applied tariff is today one-tenth what it was in 1990. In 1990, total trade as a proportion of Indian gross domestic product (GDP) was around 13 per cent. Today it is 40 per cent. India's two way foreign direct investment (FDI) to GDP ratio at just under 20 per cent is still low by global averages. But the stock of inward FDI has grown by 19 per cent a year over each of the last 20 years.

None of this is to suggest that doing business in and with India will not have its challenges. India is too complicated for its growth story to be linear. Its economic progress will be uneven and incremental, constrained by the political compromises demanded by a diverse democratic federation, held back by thinly resourced institutions, burdened by a bureaucracy too susceptible to arbitrary interference, dented by endemic corruption and shaped by a political tradition which puts much greater faith in government intervention than the efficiency of markets.

There is no point lamenting these constraints. They are wired into the Indian experience. We need to understand them but also acknowledge that they are changing and look beyond them to grasp the significance of the opportunities created by a growing Indian economy.

India marches to its own tune – It is not the next China​


India needs to be understood on its own terms. It will always march to its own tune. It is the only country with the scale to match China but it will not be the next China. Indeed comparisons with China only get in the way of understanding the nature of the opportunities in the Indian market.

No Indian Government will be able to direct the economy in the way China does. Nor will it ever have the control over the allocation of resources which has been intrinsic to China's economic success. China has a discipline to its economic planning which flows from its one party political system and the competence of its state institutions. Also for all its diversity, China has a strong Han Chinese core which has no counterpart in the linguistic and cultural diversity of India.

India's economy will be big but not as big as China's (which is currently five times its size). China's economy would have to crash and India's grow at over 10 per cent a year for several decades for India to catch up. Neither is likely.

Nor will India's economic model mirror that of East Asia's. Its growth will be driven by consumption and services, not exports. It has demographics on its side, a long entrepreneurial tradition, an expanding consumer class, significant headroom for productivity improvements and the confidence that comes from a strong sense of its civilisational pedigree and destiny.

The drivers of Indian growth are deeply structural which suggests they are also sustainable. They include the urbanisation of the world's largest rural population, the gradual movement of the informal economy, currently comprising 90 per cent of India's workers, into the formal economy, a young demographic with a mean age of 27, considerable investment in infrastructure, and the beginnings of an ambitious program to upskill 400 million Indians.

These structural drivers will likely keep India on a relatively strong growth path. I have deliberately taken a moderate view of the rate of growth out to 2035, assuming that it will be in the order of 6–8 per cent each year over the next 20 years. This assumes incremental rather than radical structural reforms. But for what is already the world's fastest growing large economy to grow by 6–8 per cent each year for the next two decades will still be transformative for India itself, its region and its economic partners.

Most of all India has scale. It will by 2035 overtake China as the world's most populous country. This means a deep domestic market which will likely make India the world's third largest economy by 2035 after China and the United States measured by market exchange rates. It is already the third largest economy measured by purchasing power parity.

Scale encourages ambition but it is the structural complementarity between the Indian and Australian economies which is the key to translating ambition into opportunities. Put simply, a growing Indian economy will need more of the things Australia is well placed to provide from education services to resources and energy; from food to health care; from tourist destinations to expertise in water and environmental management. Indeed services are likely to be the fastest growing segment of our future economic relationship with India.

Beyond scale and complementary economies there is a third important reason to bring India into the first tier of our economic relationships: spreading risk.

Exports and attracting foreign investment are key elements in the strength of the Australian economy and our ability to maintain a rising standard of living. In a global economy, it pays to hedge against volatility by diversifying. If we can count India in our top three export destinations and if we can tap more two way investment between our countries, Australia's exposure to global risk is reduced. A strong economic relationship with India strengthens Australia's economic resilience. That is important for a country where 40 per cent of our exports currently go to just two markets with ageing populations. India – a large and young population – adds balance and spreads risk in Australia's economic relationships. A partnership with India in science and innovation can also help drive domestic productivity and create Australian jobs in sectors we are yet to imagine.

A three pillar strategy: economics, geopolitics and people​


The focus of this report is on building a sustainable long term India economic strategy. But an economic strategy works best within a much broader and deeper relationship with India.

Our economic strategy should be seen as one of three pillars on which the bilateral relationship should rest, the other two being geopolitical congruence and people to people ties.

Geopolitical convergence​


Our geopolitical congruence flows from three core factors.

First, as partners in the Indo-Pacific we are each grappling with the implications of the fading of US strategic predominance and the sharpening ambition of China to become the predominant power in the region.

Second, both Australia and India support a rules based international order. That order, the product of decades of United States-led investment in global institutions and public goods, is under increasing threat. Its defenders are shrinking and its challengers growing. Since Australia can neither buy nor bully its way in the world, a system based on rules not might is important.

Third, India is a partner in seeking to forge regional institutions in the Indo-Pacific which are inclusive, promote further economic integration and can help at the margins to manage the tensions which inevitably flow as economic growth across the region shifts strategic weight and relativities. That is why India should be brought into the Asia-Pacific Economic Cooperation (APEC). Moreover, both Australia and India see China as an important part of inclusive regional institutions, especially the East Asia Summit (EAS). And both countries attach a high priority to our relations with the Association of Southeast Asian Nations (ASEAN) and the individual countries of Southeast Asia.

So while India will always march to its own strategic tune and cherish its strategic autonomy, the scope for us to work together on the broader challenges of the Indo-Pacific is growing as is India's willingness to work with the United States, Japan and Australia in ways which capture the growing strategic convergence of these four democracies.

From Australia's perspective it is India's liberal democratic and secular character which provides a foundation for this evolving strategic congruence. Some worry that this defining and tested feature of India is under strain. That seems an exaggerated fear at this time. But anything which materially weakens India's democratic credentials or its commitment to a secular liberal society would not only be a tragedy for India but also call into question the very basis of our strategic partnership.

People to people ties​


The third pillar of the relationship – our growing people to people links – may over time prove to be the most significant asset of all.

India is currently our largest source of skilled migrants, our second largest source of international students and a substantial proportion of those who come to Australia under temporary visas to fill skilled positions that Australians cannot.

In the last decade we have seen a very large increase in the size of the Indian diaspora in Australia, now 700,000 strong and the fastest growing large diaspora in Australia. To reach this size in a little over a decade is remarkable.

This diaspora will have a big role to play in the partnership of the future. They can go into the nooks and crannies of a relationship where governments cannot. They can shape perceptions in a way governments cannot. And they create personal links, in business, the arts, education, and civil society which can help anchor the relationship.

Chapter 18 provides a detailed analysis of the Indian diaspora in Australia and its potential role in building the business relationship with India. It points to the likely growing political influence of the Indian diaspora, something which is already evident in state politics. As they have in Canada, the Indian diaspora may prove over the next two decades to be the most politically active of any migrant group in Australian history since the Irish. This will have implications for the priority our political leaders will place on the relationship with India.

Ten Sectors and Ten States: the core of the strategy​


Economics, geopolitics and people form the three core pillars of the relationship we must build with India. But Australian business needs something beyond this macro framework; a mapping of the terrain of opportunity; an entry point into how best to think about the Indian market; how to make sense of its size and diversity and where to begin.

The core of the economic strategy set out in this report is 'sectors and states'.

Sectors​


This report identifies 10 sectors in an evolving Indian market where Australia has competitive advantages. These in turn are divided into a flagship sector (education), three lead sectors (agribusiness, resources and tourism) and six promising sectors (energy, health, financial services, infrastructure, sport, science and innovation). I have not included defence and security among the priority sectors but, in light of the government's broader priority on defence exports I have included a chapter on the opportunities in this area.

Identifying sectors is not choosing winners: only pointing to the areas which hold promise for Australian trade and investment in a growing market where there will be large gaps between what India needs and what it can provide from domestic resources.

The sectoral analysis is forward looking but it cannot escape extrapolations from the current situation. I recognise at the outset that the future may in some areas be quite different to extrapolations. Indeed over a 20 year period there may well be opportunities which no one can clearly see today.

Education is identified as the flagship sector of the future because of a combination of Australian expertise, the scale of India's education deficit and the way in which an education and training demand weaves its way through virtually every sector of the Indian economy.

Education is so much more than increasing the number of Indian students coming to Australia. It also signals engagement, collaboration, a responsiveness to the priorities of India and a bridge between our two communities. Australia's education relationship with India needs to focus on a message of quality, on postgraduate and research collaboration, on science and innovation, on forging partnerships to deliver cost effective vocational education in India and partnering with India in the digital delivery of education. The last will be crucial if India is to meet its ambitious target of upskilling 400 million Indians.

The three lead sectors are chosen because they are areas where Australia is well positioned to become a top five partner of India. The six promising sectors represent areas where Australia can position itself as a niche provider in a large market.

In the chapters that follow we delve deeply into each of these 10 sectors: providing an analysis of its trajectory out to 2035, the drivers of growth including which Indian states to focus on, the constraints, and the opportunities for Australian exports and two way investment in the short, medium and long term.

States​


The focus on states reflects a number of judgements. First, India is best seen not as a single economy but as an aggregation of very different state economies, each growing at different rates, driven by different strengths, led in different ways and likely to continue to be uneven in their progress.

Second, competitive federalism is becoming a larger part of the underlying dynamic of the Indian economy. It is encouraged by the centre and is being enthusiastically embraced by the states, especially those five states which produce 70 per cent of India's exports.

Third, many of the hardest structural reforms holding back the Indian economy, such as land access and labour market regulation, are more likely to be progressed by state governments rather than centrally.

Fourth, as barriers to trade across state borders reduce, and the introduction in 2017 of a Goods and Services Tax (GST) was the single biggest step in this direction, labour and capital will gravitate towards those states which offer the best conditions and prospects for business.

The Central Government will always be important for doing business in India. It sets the macroeconomic policy framework, especially in terms of foreign investment policy. Constitutionally powers are both divided and shared between the centre and the states. But the centre has a reach which often goes well beyond the black letter of the constitution.

However it is states which practically control many of the things which make the day to day life of a foreign business in India easy or difficult: access to land, regulation of labour, provision of infrastructure, the application and interpretation of regulation and so on.

For all these reasons, the strategy recommends that a focus on sectors be matched with a focus on states. Ten states are selected: Maharashtra, Gujarat, Karnataka, Tamil Nadu, Andhra Pradesh, Telangana, West Bengal, Punjab, the National Capital Region of Delhi and Uttar Pradesh. Other states may also present opportunities but the weight of effort should be in these 10 states.

The choice of states reflects a combination of their economic heft, their commitment to reform, their relevance to the sectors where Australia has competitive advantages, the ease of doing business there, their investment in the social and physical infrastructure which drives growth and their economic potential in the future.

A focus on states includes an important role for Australian states, each of which are keen to do more in India and are especially important in promoting Indian investment in Australia.

The intersection of these 10 sectors and 10 states is at the heart of the strategy recommended in this report. It is a strategy designed to play to Australia's economic strengths, make planning for entry into the Indian market more manageable, respond to India's priorities, identify where the future growth is, and plug into the benefits of competitive federalism in India.

Investment​


Chapter 2: The Investment Story looks at the broader investment outlook in India. Each of the sectoral chapters also includes a section on the two way investment opportunities and how trade and investment can reinforce each other.

Today, the Australia India investment relationship is small. Yet we are both countries dependent on foreign investment to lift our growth and standard of living.

In virtually all of Australia's relationships in Asia, direct investment lags trade by a wide margin. India holds out the prospect of being different. It has a relatively open foreign investment regime, more open than its approach to trade. It has the rule of law although long delays (it takes an average of four years for courts to resolve a commercial case) considerably erode this advantage. Its institutions are familiar to Australians, both derived from British models, and English is widely spoken – a very significant asset. Automation, artificial intelligence and India's own services sector moving up the value chain means investing in India is no longer about offshoring labour-intensive tasks.

In short, we may have a better chance with India to secure more balance between our trade and investment relationship than we have with any other major Asian economy. Indeed we should set ourselves the ambition by 2035 for India to be the third largest destination in Asia for outward Australian investment.

This is a big target given our low starting point. But attracting foreign investment is a key element in the Indian economic model and over 20 years India's policy framework on foreign investment will become more and more open. India also offers big opportunities in the long term for Australian pension funds and Australian expertise on infrastructure finance is well suited to a country where addressing the infrastructure deficit is essential to economic growth. As the business environment in India improves Australian investors will hopefully pay much closer attention to investment opportunities and the way in which investment and trade come together in the Indian market.

The role of Government​


In an ideal world an economic strategy would rest on the business to business relationship with a light touch from government. It is business on both sides which should drive the trade and investment relationship. India however is a market where government cannot be left out of the equation. Indeed governments on both sides have an important role to play in bringing a successful economic strategy to fruition.

A number of countries that are currently doing well in India adopt a national strategy which puts government coordination and leadership at the forefront of their India strategy. Japan and Singapore are two good examples.

At one level an 'Australia Inc' approach to India also makes conceptual sense. The government plays an important role in the Indian economy. Public enterprises still constitute a significant part of India's corporate structure, especially in the banking sector and in resource extraction. The government set policy and regulatory framework is key to many of the sectors which this report identifies as areas of opportunity for Australia in India. Also, the role of market forces is less strong in India's political culture than it is in Australia.

The Australian experience however does not lend itself so easily to an Australia Inc approach. Australian Governments have neither the capacity nor the inclination to direct business much less expend substantial resources to assist Australian companies enter and thrive in the Indian market.

We have to find our own settling point for the role of government in an India economic strategy: one that reflects the Australian system and experience where business is done by companies not governments.

But this does not mean a hands off approach by government. This is a report to the Australian Government with a natural focus on what the government should do. It starts with the premise that the government has an important role to play in facilitating trade and investment with India.

This report identifies six areas where the Australian Government should play an active role.

First, applying sustained high level attention to the bilateral relationship with India led at the highest levels of the Australian Government and including a regular pattern of prime ministerial and ministerial visits. Each of the 10 sectors identified in this report should have a ministerial champion at the federal level, reinforced by the work of the Commonwealth Public Service and Australian state governments.

Second, government has a role in raising awareness of the opportunities in the Indian market. This does not mean boosterism. We need to navigate between the hype that India is the next China and the outdated pessimism that India is just too hard.

Third, government, and particularly agencies such as DFAT and Austrade, have an important role in helping Australian firms understand the complexities of the Indian market place and India's business culture, including how to go about finding the right Indian partner and understanding the broader political economy of India.

Fourth, the government should invest the resources to ensure we have an adequate diplomatic and trade footprint in India. This is particularly important for a strategy that focuses on Indian states and cities. Australia starts in a strong position. We have one of the most extensive networks of diplomatic and especially trade offices in India, now numbering 11 offices. But we need to do more including opening new Consulates-General in Kolkata and Bengaluru.

Fifth, government is the only player that can lead a policy dialogue with India that looks at our respective experiences in policy reforms and regulatory controls. Virtually all of the sectors identified in this report are highly dependent on the right policy and regulatory framework. The economic opportunities in both directions will depend on the economic policy settings of each government. This underlines the need for a deeper policy dialogue between Australia and India which also brings in the private sector to ensure that policy changes reflect commercial realities and priorities and facilitates business engagement. A deeper policy dialogue with India will help us better understand the drivers of Indian economic policy and the role of the state in India's political culture, just as it might help India better understand the limits that government can play in the Australian context.

Sixth, government has a unique role to play in enhancing the understanding of Australia in India. The truth is – that at a community level – neither of us know much about the other. The Indian elite has traditionally not looked to Australia. That is beginning to change, but only slowly. And for the broader Indian community, images of Australia tend to be sketchy, shaped by cricket, historical connections and sporadic coverage in the Indian media.

Similarly, in Australia, there is very little understanding of contemporary India in the wider community. Australians, for the most part, have only a partial glimpse of India's diversity, its sophistication and of the scale of its prospects.

If our partnership is to reach its full potential we must modernise our perceptions of each other. It is in our interests to do away with misconceived notions of what the other stands for.

What we achieve together in coming decades will have little to do with a shared imperial past. It will have not much to do with the English language, although that will greatly help. And it will have to be a tighter bond than anything forged on a cricket field. Rather, it will turn on gaining a real understanding of each other, of where we differ but also what brings us together including shared interests and the strength of our diversity.

The role of business​


Just as government has a large role to play in an enhanced India economic strategy, so also do we need stronger business to business relationships.

The current structures which underpin the business to business relationship are not strong enough to support a larger trade and investment relationship. The Australia-India CEO Forum is a useful vehicle but it needs an agenda beyond its meetings which themselves should be brought into a regular annual cycle.

Similarly the Australia India Business Council (AIBC) needs more clout. It should include the big corporates who do business in India as well as the small and medium enterprise (SME) membership which is its current focus. The AIBC also needs to broaden much further beyond the diaspora community and in the process be less susceptible to the factionalism which too often plagues diaspora groups.

A more active role by the Business Council of Australia (BCA) would be one means of strengthening the business to business relationship. The BCA would make a good secretariat for the CEO Forum, giving it some business heft and aligning it more closely with Australia's business priorities.

There should also be a much closer relationship between the BCA and AIBC and the Indian industry groups such as the Confederation of Indian Industries (CII), the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Association of Chambers of Commerce which play such a key role in promoting India's business links with its major trading partners.

The current business to business architecture struggles to keep up with the existing relationship let alone pave the way for the larger relationship to come. Its leadership is dedicated and eager to do more but it is constrained by limited resources and a volunteer base. This must change and the government should do what it can to facilitate that change.

The strategy outlined in this report goes to how Australia positions itself to build a long term and sustainable partnership with India. It is for the most part a strategy about Australia in India. For the partnership to be complete however there also needs to be a strategy for India in Australia and I hope that is something the Indian Government will consider. A unilateral strategy can only partially succeed. A partnership, on the other hand, rests on that most enduring of foundations: mutual interests.

India is already in the first tier of Australia's diplomatic relations. It has been a high foreign policy priority for at least two decades. But the economic relationship is stuck in the second tier. This report is about how we can change that and place the economic relationship at the centre of our partnership with India.

Historic trade deal with India​

Australia today signs an historic trade agreement with India, the Australia-India Economic Cooperation and Trade Agreement, that will further strengthen our relationship while making Australian exports to India cheaper and creating huge new opportunities for workers and businesses.


Tariffs will be eliminated on more than 85 per cent of Australian goods exports to India (valued at more than $12.6 billion a year), rising to almost 91 per cent (valued at $13.4 billion) over 10 years.


Australian households and businesses will also benefit, with 96 per cent of Indian goods imports entering Australia duty-free on entry into force.


India is the world’s largest democracy and the world’s fastest-growing major economy, with GDP projected to grow at nine per cent in 2021-22 and 2022-23 and 7.1 per cent in 2023-24.


In 2020, India was Australia’s seventh largest trading partner, with two-way trade valued at $24.3 billion, and sixth largest goods and services export market, valued at $16.9 billion. Our Government’s goal is to lift India into our top three export markets by 2035, and to make India the third largest destination in Asia for outward Australian investment.


The Australia-India Economic Cooperation and Trade Agreement (AI ECTA) signed today will further strengthen that relationship.


Prime Minister Scott Morrison said the agreement would create enormous trade diversification opportunities for Australian producers and service providers bound for India, valued at up to $14.8 billion each year.


“This agreement opens a big door into the world’s fastest growing major economy for Australian farmers, manufacturers, producers and so many more,” the Prime Minister said.


“By unlocking the huge market of around 1.4 billion consumers in India, we are strengthening the economy and growing jobs right here at home.


“This is great news for lobster fishers in Tasmania, wine producers in South Australia, macadamia farmers in Queensland, critical minerals miners in Western Australia, lamb farmers from New South Wales, wool producers from Victoria and metallic ore producers from the Northern Territory.


“This agreement has been built on our strong security partnership and our joint efforts in the Quad, which has created the opportunity for our economic relationship to advance to a new level.”


Benefits of AI ECTA include:


  • Sheep meat tariffs of 30 per cent will be eliminated on entry into force, providing a boost for Australian exports that already command nearly 20 per cent of India’s market
  • Wool will have the current 2.5 per cent tariffs eliminated on entry into force, supporting Australia’s second-largest market for wool products.
  • Tariffs on wine with a minimum import price of US$5 per bottle will be reduced from 150 per cent to 100 per cent on entry into force and subsequently to 50 per cent over 10 years (based on Indian wholesale price index for wine).
  • Tariffs on wine bottles with minimum import price of US$15 will be reduced from 150 per cent to 75 per cent on entry into force and subsequently to 25 per cent over 10 years (based on Indian wholesale price index for wine).
  • Tariffs up to 30 per cent on avocados, onions, broad, kidney and adzuki beans, cherries, shelled pistachios, macadamias, cashews in-shell, blueberries, raspberries, blackberries, currants will be eliminated over seven years.
  • Tariffs on almonds, lentils, oranges, mandarins, pears, apricots and strawberries will be reduced, improving opportunities for Australia’s horticulture industry to supply India’s growing food demand.
  • The resources sector will benefit from the elimination of tariffs on entry into force for coal, alumina, metallic ores, including manganese, copper and nickel; and critical minerals including titanium and zirconium.
  • LNG tariffs will be bound at 0 per cent at entry into force.
  • Tariffs on pharmaceutical products and certain medical devices will be eliminated over five and seven years.

Minister for Trade, Tourism and Investment Dan Tehan said AI ECTA would also further strengthen the people-to-people links between our countries. India was Australia’s third largest market for services exports in 2020.


“This agreement will turbocharge our close, long-standing and highly complementary economic relationship in areas such as critical minerals, professional services, education and tourism,” Mr Tehan said.


“It will create new opportunities for jobs and businesses in both countries, while laying the foundations for a full free trade agreement.”


Both countries will facilitate the recognition of professional qualifications, licensing, and registration procedures between professional services bodies in both countries.


Australian services suppliers in 31 sectors and sub-sectors will be guaranteed to receive the best treatment accorded by India to any future free trade agreement partner, including in: higher education and adult education; business services (tax, medical and dental, architectural and urban planning; research and development; communication, construction and engineering; insurance and banking; hospital; audio-visual; and tourism and travel.


Australia will also provide new access for young Indians to participate in working holidays in Australia. Places in Australia's Work and Holiday program will be set at 1,000 per year and Australia will have two years to implement the outcome. This is expected to contribute to both workforce requirements and to boost tourism to support our post-COVID recovery.


In a boost to our STEM and IT workforces, the length of stay for an Indian Student with a bachelor’s degree with first class honours will be extended from two to three years post study in Science, Technology, Engineering or Mathematics (STEM) and information and communications technology (ICT) sectors.


Australia and India have also agreed to undertake cooperation to promote agricultural trade as part of the agreement and will now work toward concluding an enhanced agricultural Memorandum of Understanding (MoU).


Mr Tehan today signed AI ECTA on behalf of Australia during a virtual ceremony with India’s Minister of Commerce & Industry, Consumer Affairs & Food & Public Distribution and Textiles, Piyush Goyal, attended by Prime Ministers Scott Morrison and Narendra Modi.


Today’s announcement builds on the Morrison Government’s $280 million investment to further grow our economic relationship and support jobs and businesses in both countries, that includes:


  • $35.7 million to support cooperation on research, production and commercialisation of clean technologies, critical minerals and energy;
  • $25.2 million to deepen space cooperation with India and
  • $28.1 million to launch a Centre for Australia-India Relations.

AI ECTA is an interim agreement and both countries continue to work towards a full Comprehensive Economic Cooperation Agreement.
 

RISING SUN

Senior member
Dec 3, 2017
14,402
6,409

India-Australia Free Trade Deal Offers Australia First Mover Advantage in World’s Fastest Growing Economy​

AI ECTA is India’s first deal with a developed economy in a decade and only a second trade deal in a span of eleven years. It is indicative of how Australia’s bilateral relationship with India has grown in leaps and bounds recently, particularly since the elevation of ties to a Comprehensive Strategic Partnership (CSP) in 2020. The signing of the reasonably comprehensive interim trade deal, the Australia India Economic Cooperation and Trade Agreement (AI ECTA ), promises to push bilateral trade from the current $27.5 billion to $45 billion in the next five years, and on to $130 billion by 2030.

With federal elections just a few weeks away, PM Morrison has affirmed his government’s commitment to building Australia’s economic resilience by delivering economic diversification. AI ECTA will allow tariffs to be eliminated on more than 85 per cent of Australian goods exports to India (valued at more than $14.8 billion a year), and 96 per cent of Indian goods imports entering Australia. Australia’s goal is to lift India into its top three export markets by 2035 and to make India the third-largest destination in Asia for outward Australian investment.

AI ECTA is India’s first deal with a developed economy in a decade and only a second trade deal in a span of eleven years. The last agreement India signed was with Japan in 2011, followed by UAE and Australia in 2022.

Australia and India began negotiating a Free Trade Agreement (FTA) in 2011. But after six years of toil, nine rounds of negotiations, and a detailed joint FTA feasibility study, the negotiations were suspended over divided sectoral interests in 2015. The negotiations for AI ECTA were formally re-launched on 30 September 2021 and concluded on a fast-track basis by the end of March 2022.

The appointment of former Prime Minister Tony Abbott, who has a good rapport with PM Modi and India’s political class, as a special trade envoy to India in August 2021 reflected the Morrison government’s awareness that strong relationship building was needed to make progress on a trade deal with India.

The recent 3-day visit of the Indian Commerce Minister Piyush Goyal to Australia after the deal was signed included a large Indian business delegation of 58 business leaders and constituted a strong message to stakeholders that India is aggressively pushing its economic growth ambitions and global economic engagements.

REFLECTIONS ON WHAT AI ECTA MEANS FOR BOTH COUNTRIES
Since the elevation of bilateral ties to a Comprehensive Strategic Partnership in 2020, the past 18 months have been exciting and action packed for the Australia-India bilateral relationship. The constant shuffle between gloom and doom of COVID and the ambitions of government to maximise options and opportunities for producers, manufacturers, and industry sectors has been an interesting lesson in how tough times can become a lever for new promising gains. China is no longer Australia’s best trading ‘friend ’, while the pandemic has exposed all countries to global supply chain risks , the dangers of reliance on highly concentrated trade flows and the need for economic diversification.

In that context, the AI ECTA deal is both the dawn of a new trade orientation for Australia and a poster example of New India’s willingness to engage with countries on trade deals that it views as reciprocal, equitable and non-discriminatory. It should assist in changing perceptions across the developed world which have typecast India as ‘protectionist’.

AI ECTA brings Australia to the inner circle of Indian economic diplomacy, which otherwise has often been overlooked because of Australia’s population size and scale, offering Australia a first-mover advantage across various sectors in a large growing aspirational economy; one that requires goods and services in agriculture, critical minerals, education and skills training, and healthcare.

India’s scale, demographics, and growing middle class offer a new long-term growth opportunity to Australian businesses. Australian manufacturers can use India as a cost-effective manufacturing base, and export from India to the world. At a Business Council of Australia event during his recent 3-day tour, Minister Goyal discussed how “in 11 years Cochlear have sold 27,000 implants in India. Cochlear can scale up its operations by setting up a manufacturing facility in India, which will not only reduce the cost of implants but also provide export opportunities from India to other countries, and they can do this without any commitment to technology transfer, as has been insisted by other countries.”

Strong Australia-India economic ties will also pave the way for a stronger Indo-Pacific economic architecture based on supply chain resilience, complementarities, sustainable commitments and mutual dependence across countries. The combined GDP among the Quad countries (US, Japan, India, and Australia) sits at $34 trillion, with all four countries also having the balancing capacity to fulfil each other’s needs and make up for their respective economic weaknesses.

For example, India, an energy-dependent economy that needs to constantly upgrade its infrastructure, could rely heavily on Australia, a commodity-rich economy, for inputs. The newly deepened Australia-India economic partnership could pave the way for India to engage in further regional economic integration.

AI ECTA will build “brand India” and “brand Australia” in respective markets and develop business confidence. It will bring India to the centre of Corporate Australia’s business aspirations and connect Australian corporates to the New India growth story.

From Scott Morrison’s “ScoMosas ”, to his recent khichdi (Narendra Modi’s favourite dish), the message is clear that all recipes and ingredients have been tried and tested to ensure that the bilateral relationship is prepared with care, and is well nourished. The governments have delivered. Will business follow?
Natasha Jha Bhaskar is General Manager of Newland Global Group, a Sydney-based Australian corporate advisory firm specialising in the Australia-India space.
The views expressed here are the authors alone, and do not represent the views of the Institute for International Trade
 

RISING SUN

Senior member
Dec 3, 2017
14,402
6,409

Top Navy brass of India and Australia hold talks in Delhi, military ties touching new high​

NEW DELHI: Amidst the rapidly changing strategic environment of the Indo-Pacific, India and Australia are working to bolster their military to military relationship with staff talks between the two navies held here on Wednesday.


The Indian Navy in a statement said, “The 14th Indian Navy and Royal Australian Navy (RAN) staff talks were held from 11-13 April at New Delhi.” The meeting was co-chaired by Rear Admiral Christopher Smith, Deputy Chief of the RAN, and Rear Admiral J Singh, Assistant Chief of Naval Staff (Foreign Cooperation and Intelligence) of the Indian Navy. Commodore Stewart Dunne, hydrographer to the government of Australia, also attended the meeting, the Indian Navy added.





Major issues discussed included maritime operations, information exchange and training. Talking about the important points of discussion, the Indian Navy stated, “Both sides also acknowledged the growing cooperation between the two Navies amid the emerging challenges on the maritime front, and agreed to enhance collaboration and interoperability towards ensuring maritime security in IOR.”


On the completion of the talks, RAdm Christopher Smith interacted with VAdm Sanjay Mahindru, Deputy Chief of Naval Staff, Indian Navy, at South Block, New Delhi on April 13.


Meanwhile, the Indian Navy’s Long Range Maritime Reconnaissance aircraft P8I reached Darwin in Australia on April 11 to participate in coordinated maritime operations. The aircraft and its crew would be undertaking an operational turnaround at Darwin.


During its stay, the team from the Indian Navy's maritime patrol squadron, Albatross (INAS 312) is scheduled to engage with its counterparts from the 92 Wing of the Royal Australian Air Force.


P8 aircraft from both the countries, would be conducting coordinated operations in Anti-Submarine Warfare and surface surveillance, to enhance maritime domain awareness.


Both India and Australia share strategic interests, promoting a free and open Indo-Pacific and rules based order in the region, said the Navy.


In recent times, increased interaction between the two maritime nations, through bilateral and multilateral exercises at sea, has enhanced interoperability and fostered bridges of friendship.


The relationship between India and Australia has transformed in recent years. In 2020, India and Australia elevated their bilateral relationship to comprehensive strategic partnership and are members of the Quad grouping which also includes Japan and the United States. The 2+2 Ministerial Dialogue between the foreign and defence ministers of the two countries held in September last year has added a new dimension to the relationship.


In February 2021, Australia posted a liaison officer at the Indian Navy's Gurugram-based Information Fusion Centre (IFC) that has emerged as a major hub of maritime security information relating to the Indian Ocean which has become a region of increased Chinese naval activities.
 

RISING SUN

Senior member
Dec 3, 2017
14,402
6,409
 

RISING SUN

Senior member
Dec 3, 2017
14,402
6,409

Prime Minister’s meeting with Australian Prime Minister on the sidelines of the Quad Leaders’ Summit​

May 24, 2022
Prime Minister Shri Narendra Modi held a bilateral meeting with Australian Prime Minister H.E. Mr. Anthony Albanese on 24 May 2022 on the sidelines of the Quad Leaders’ Summit in Tokyo, Japan.

Prime Minister congratulated Prime Minister Albanese for his election victory. Both leaders reviewed the multi-faceted cooperation under the Comprehensive Strategic Partnership, including in trade & investment, defence manufacturing, renewable energy including green hydrogen, education, science and technology, agricultural research, sports and people-to-people ties. Both Prime Ministers affirmed their desire to continue the positive momentum in the bilateral relationship.

Prime Minister extended an invitation to the Australian Prime Minister to visit India at an early date.
 

RISING SUN

Senior member
Dec 3, 2017
14,402
6,409

Deputy High Commissioner's remarks at FICCI Seminar on “Preventing marine litter and plastic pollution”​

Deputy High Commissioner Sarah Storey's remarks at FICCI Seminar on “Preventing marine litter and plastic pollution”
(Check against delivery) 27 May 2022
Namaskar, Good morning and a very warm welcome from the Australian High Commission in New Delhi.

It is a pleasure to be speaking at this seminar on preventing marine litter and plastic pollution through Indo-Pacific Oceans Initiative.

Thank you to FICCI, Southern Cross University, and the Pacific Islands Development Forum for hosting today.

I am proud that this seminar is supported by the Australian Government through the Australia India Indo-Pacific Oceans Initiative Partnership.

And I’m particularly pleased to see representatives from Government, industry, and academia from across the Indo-Pacific.

Beyond India and Australia, it is especially pleasing to see our family from the Pacific Islands represented here today.

This event promises to be a valuable addition to our increasingly regular regional policy discussions.

Today’s program seeks to enhance maritime cooperation through sharing experiences and best practices towards the management and protection of coastal and marine ecosystems.

There is value in today’s discussion by bringing in industry voices, to engage with government, and identify how to strengthen regulatory frameworks to enable prosperity and sustainability for our oceans.

Because we know the two are not separate: ongoing prosperity for coastal communities relies on careful management of marine biodiversity and fisheries.

I want to start today’s discussion with some framing comments on the larger Indo-Pacific maritime context – and offer thoughts on how today’s seminar feeds into the “bigger picture”.

We often say that the Indo-Pacific is at a high tide.

The region is projected to account for two thirds of the world’s economic growth. By 2030, it will be home to a middle class of almost 3.5 billion people.

It’s also home to six of the world’s ten biggest military spenders.

As a result, strategic competition is sharpening across the region and testing state sovereignty of smaller partners.

Significantly, the international system is becoming more multi-polar.

Multi-polarity means that countries like India and Australia have a responsibility in ensuring a peaceful, inclusive, and resilient region.

A region where the rights of all states are respected. Where disputes are managed peacefully, legally, and without coercion.

And where open markets facilitate the flow of free trade, greater investment, and stronger people-to-people ties.

Creating such an order is something India’s Prime Minister Modi has called a ‘sacred duty’.

But neither of us – or any other country – can do it alone.

That’s why we welcome Prime Minister Modi’s Indo-Pacific Oceans Initiative (IPOI).

Australia is proud to co-lead with India the maritime ecology pillar of the IPOI.

Through the IPOI, Australia and India can work closely together to help foster regional collaboration and capacity building that improves the health of our shared oceans.

The IPOI of course does not create new architecture but serves as a cross-cutting platform that enables practical cooperation on issues across all regional forums.

Because like India, and like our partners across the region, we are focused on delivering tangible and meaningful cooperation to uphold a regional maritime order aligned with all our interests.

We are working to address the maritime issues that matter to our friends across the region: whether it be marine litter and plastic, fisheries, upholding the law of the sea, free and open trading lanes, and humanitarian assistance and disaster relief.

We recognise maritime ecology is an essential part of a prosperous, secure, and resilient Indo-Pacific.

To also support this goal, earlier this year Australia announced we would enhance our engagement with the Northeast Indian Ocean.

This included three packages of initiatives, comprising a Bay of Bengal Maritime Partnership, a Bay of Bengal Trade and Energy Partnership, and a Bay of Bengal Connectivity Partnership.

These are among many more new actions Australia is taking to enhance our engagement with our maritime partners.

It is this focus on the tangible, the meaningful, and the practical that makes Australia a pragmatic partner on maritime issues.

It is why welcome the opportunity to hear the frontline experiences from industry and coastal communities from across the region.

So I wish you the very best for the next two days, and I look forward to seeing outcomes and policy recommendations, drawing on your frontline experiences and knowledge.

And I encourage you to also think big picture – about how these lessons can help uphold broader rules and norms in the sustainability and accessibility of our shared oceans.

I hope this is just the first of many more fruitful seminars, masterclasses, and roundtables.

Thank you
 

RISING SUN

Senior member
Dec 3, 2017
14,402
6,409

India-Australia Relations Authentic and Strong: Sarah Storey​

“India has changed a lot between 1993 and 2022,” says Sarah Storey, and so has her relationship with India. While she was a backpacker in 1993, discovering India on foot and long train journeys, today, she is the Deputy High Commissioner of Australia to India. What hasn’t changed is Sarah’s love for Indian culture, its crafts and fabrics and festivals. A work trip to West Bengal necessarily involves buying handwoven sarees or temple tours in Tamil Nadu are combined with trying out the local cuisine.


Moreover, it is her vigour and openness to everything that can bring India and Australia closer that has kindled her love for India. With admirable enthusiasm, Sarah engages with people from different walks of life to explore opportunities that strengthen diplomatic ties. It is with this same enthusiasm, that Sarah spoke to the team of Indica Soft Power, sharing her insights on the multi-faceted India-Australia relations and opening avenues for deeper soft power engagements.


How have India-Australia diplomatic ties grown in recent years?


Our foremost priority is to promote Australia as a critical partner for India and seeking to sustain and further deepen our strong relationship. This forms the basis of our diplomatic ties and work in India. The very sincere and authentic connections built at the highest level, between the Indian Government with the Australian Government, all the way down to people to people, reinstates this point.


Our work at the High Commission in Delhi and also in Mumbai, Chennai and Kolkata is currently focused on promoting the announcements made around the 2nd India-Australia Virtual Summit in March 2022. This involves a 1500 crore package of partnership across segments of trade, security, climate change etc. The fact that Prime Minister Modi very graciously agreed for Australia to be just one of three countries with which India holds annual summits is wonderful. There are only two of us, including Japan being the other, that negotiated the Free Trade Agreement with India. The work is looking to deepen our engagement with practical efforts and we were really pleased to be able to do that.


I was also delighted with the recent Quad summit and our new government’s resolve in sustaining our rapidly deepening relationship, both bilaterally and also through the Quad. The Quad is certainly a core pillar of Australia's Indo-Pacific agenda. Within three hours of being sworn in, the newly elected Prime Minister Anthony Albanese met the Quad leaders, which was his very first international undertaking. Further, Foreign Minister Penny Wong had her very first interviews with the esteemed Dr. S Jaishankar. This sent very powerful messages about India-Australia relationships with room to grow.


FUynxVnUcAAoDEr.jpg
At At INS Hansa, the Indian Navy's largest air base.


Together with India, we are largely focused on driving regional economic security. Being a prosperous nation, India ensures greater regional security. We are committed to strengthening our cyber security cooperation because without a doubt, our region is subject to sharper strategic competition. We are looking at clean energy supply chains, including scaling up renewable energy and a focus on critical minerals cooperation and better environmental and health security.


We also seek to establish partnerships of deep expertise, collaboration and complementarity that spans across sectors. Recently, we launched a collaboration between the Deakin University in Australia and TCS on artificial intelligence and machine learning. This allows Australian partnerships to collaboratively address skill gaps. Besides this, we are looking at vaccine initiatives and industry engagement between the two countries. We are looking to drive forward that agenda bilaterally but also through the Quad.


With a shared objective to ensure a free, open and prosperous Indo-Pacific, it is important to boost our relations through education and well-being. initiatives. This requires diverse kinds of engagements and collaborative efforts involving multiple people and institutions. Ultimately, a healthier and more economically prosperous region is more resilient and secure so we support India's natural leadership in the Indian Ocean.


What are some of the areas in which you are working to increase people-to-people and cultural relations between the two countries?


Broadly, we are looking to increase the familiarity and awareness of Australia in India. We are doing the same in Australia by building awareness about India. We want to make sure we depict and portray an accurate picture of Indian society. There are initiatives that present opportunities to the growth of business and trade ties, strengthening existing education, sports and cultural linkages. There is an emphasis on the tech sector with so many people of Indian heritage around the world heading some of the largest tech firms. Keeping India's growing expertise in this sector, we would be opening the Center for Critical and Emerging Tech Policy in Bengaluru next year, because that is the need of the hour.


I would also point to our shared indigenous history. We both have shared histories of rich indigenous art and culture, and we love to bring this to the forefront with campaigns, events, artistic exchanges, collaborations etc. It is very important to acknowledge India's rich and ancient culture; its arts and diversity are clearly among its strongest assets. And we can, in fact, learn a lot from you in this regard. I am constantly amazed as I keep exploring India's wonderful culture and find new facets to it. We are also exploring the idea of organising a Taste of Australia event to showcase some of our gastronomic culture and talents in India.


In terms of people-to-people relations, we try to celebrate the achievements of Indians in Australia and Australians in India and their journeys in their adopted countries. Through programmes like the Australian Alumni Grant Scheme, we celebrate Australian alumni in India and engage with them in many ways.


We are looking to boost cultural exchanges and learnings from each other as well. Some working and mobility rights will be offered to Yoga practitioners and teachers as well as Indian chefs because are the two elements that Australians cannot get enough of and we want to really continue to promote that cross-fertilisation. We are also looking to promote some traditional craft techniques and to create synergies between communities in Australia and India.


Can you tell us a little about the role of sports in bringing the people of two countries closer?


One of our strongest pillars of cultural connection has been sports. The Australian Indian Sports Education and Cultural Society promotes and strengthens bilateral ties.


We want to build opportunities in particular for women in the game. The Football Federation of Australia conducts workshops for female coaches. In support of the National Alliance for women's football and in partnership with CEQUIN, a local NGO, we are taking strides to build the profile of women's sports. This is something I am particularly passionate about and I would like to work more with India on that ambition. We are working to get Indians excited about the Australian Football League (AFL). We have already organised a few AFL games and conducted leadership training courses, including in Kolkata and Mumbai.


But sports cooperation is not just about bringing Australian sports to India. Kabaddi is being played in Australia, driven by our vibrant diaspora. The diaspora started local Kabaddi clubs and is bringing this fabulous sport to the broader Australian Community. I would love to see that become more popular and expand its following.


SoftPowerMag-Banners-1.png



What are some of the achievements of the Indian diaspora community in Australia?


Around 730,000 Australians of Indian descent, which is a significant number for Australia. The community has grown five-fold in 20 years. In fact, in 2020, the second-largest group of overseas born residents will be in India.


The diaspora community plays an influential role in Australia’s multicultural society and democracy. The Indian diaspora contributes to our economy, business, politics, the judiciary, public service, science, the arts and civil society. Following the recent election, there are several Indian diaspora members finding a presence in Australia’s Parliament building along with those who were already in the state parliament. This was highlighted by the Australian High Commissioner to India, Barry O’Farrell in an interview sometime back when he said, “it is a remarkable testament to the power of the diaspora when the diaspora is actually contributing to representing Australia in the Australian Parliament.”


The diaspora plays a large role in building business links between our countries and deepening our bilateral economic relationship. The India Economic Strategy Update, for instance, is a call to not just governments but also to private businesses for optimum results and policies to be implemented.


A recent Australian government report titled Australia's Indian diaspora: A National Asset, further shows how the Indian diaspora is treasured. It sheds light on businesses working together across the Indian Ocean and what more we can do to harness the benefits of our complimentary economies. This is going to complement the Australia-India Business Exchange and help build awareness and linkages with Indian markers.


We have also recently announced a Center for Australia India Relationships that will be situated in Australia. We truly want to strengthen the connections with our diaspora groups. This requires a very clear roadmap that will drive people-to-people links between the two countries.


From our diaspora groups, we really want to strengthen some of those connections, so I would say there's a very clear roadmap. It is not just a vague intention to increase our ties but it is really backed up by this package.


In your opinion, how does the Australian community perceive India as a soft power in the region?


India is all about its rich culture and people. The intellectual prowess of Indian people is globally renowned with the tech community around the world largely being dominated by the Indian diaspora. Many people of Indian heritage are at the helm of leadership at the world’s largest tech firms.


I also think the Indian government has done an excellent job in assiduously and strategically building up the country's soft power by leveraging the traditional knowledge of Ayurveda and Yoga. The Indian Prime Minister, whenever he goes overseas, wants to tap into the diaspora and touch on the pride and achievement of the Indian diaspora.


However, the perception of India goes beyond Yoga, Ayurveda, the beautiful dance forms, crafts and fabrics and diaspora. India's development assistance to countries in its neighbourhood and further afield also demonstrates its credentials as a global and regional leader that has invested in the shared prosperity and security of the Indo-Pacific.


India's humanitarian assistance in times of need is a prime example of this leadership. And we are extremely pleased to see India making more forays into the Pacific Islands region, which is traditionally our backyard. The humanitarian and disaster relief assistance provided to Tonga in the aftermath of the undersea volcanic eruptions or COVID-related assistance offered to the Soloman Islands are some examples to demonstrate India's leadership in this region. This aid was facilitated by the Australian air force. This is the kind of collaboration in the Pacific that we would like to work on, with India, in a continued manner, while also expanding it beyond the Pacific.


I think that India's largest soft power tool, recently, without doubt, has been a generous vaccine export program that's played a vital role in combating COVID-19 around the world. I understand India supplied over 217 million COVID vaccine doses to the world, with many of these supplied to South Asia and Southeast Asia. Australia and India are working together through other services such as a facility called COVAX and through the Quad vaccine partnership to ensure the supply and equitable distribution of COVID vaccines. I also loved how India successfully integrated technology with its domestic vaccine program producing an outstanding digital platform COWIN and a one-stop register for vaccinations. This kind of leadership is really visible to the rest of the world.


WhatsApp-Image-2022-06-19-at-5.12.07-PM.jpeg
With the team of Indica Soft Power at Bengaluru


What are some of your most cherished experiences of travelling across India?


Back in 1993, I had come on as a backpacker, discovering most of India through long train journeys. The longest one was 27 hours but in the end, I was enthralled by what India had to offer. I was all in to embrace Indian culture – palaces, historic sites, dances and other art forms and of course a lot of wonderful food. From the deserts in the west, I travelled overland to see the magic of Varanasi and then onwards, up to Nepal. In recent times, I have been on temple tours and walking in Chennai and in Kolkata. Not only did I understand India’s spiritual and artistic heritage but also got a chance to explore the hidden and lesser-known streets and corners, and just observe Indian people going about their normal day.


It has been a long time between 1993 and now and India has changed significantly, adding a lot more experiences. For instance, when I visited Bengaluru to situate our new Center for Critical and Emerging Tech Policy, I was extremely impressed by the city’s IT and entrepreneurial side. At the same time, I have also been fortunate to get away from big cities. On a recent visit to Sundarbans, where we are working with farmers, I was delighted to see just how much effort was being taken to preserve Indian culture. Beyond travels, I have enjoyed the celebrations of festivals in India such as playing with colors on Holi. I look forward to more such festivities.