India Australia Trade Relations – Future Beckons

Today when Covid19 seems to be waning, other realities of the present times dawn onto us. The world is undergoing a major digital revolution; we are fighting climate change and also facing a fragile international security scenario.

The belligerence of China on the world stage has constrained major players to rethink their foreign policies afresh. Be it national security, technology or economy, the parameters are being redefined and redesigned. The formation of QUAD is an offshoot of this.

Just for asking for an inquiry into the origins of Covid 19, China arbitrarily disrupted trade with Australia worth $20 billion. This is not what mature countries do and China proved it is not a reliable partner. On the other hand, India is a mature democracy, rule of law prevails and it has a stable economy. Whereas Australia-China annual trade is around $200 billion, the trade between India and Australia is only about $24 billion.

India now has a unique opportunity to step into the space being rescinded by China vis a vis Australia. In November 2019, India decided to withdraw from Regional Comprehensive Economic Partnership and has opted for strategic bilateral partnerships in south-east Asia and Indo-pacific in order to promote its national interest.

Australia and India have complementary economies and both have their strategic, economic, demographic and technological strengths that place them in the forefront of powerful nations in Indo-Pacific and on the world stage. Australia-India relations have never been better. The elevation of the bilateral relationship at the virtual leader’s summit in June 2020 to a “Comprehensive Strategic Partnership” reflected the obvious chemistry on display between Prime Ministers Narendra Modi and Scott Morrison.

As part of the Joint Statement on a Comprehensive Strategic Partnership between India and Australia, Prime Ministers Morrison and Modi decided to re-engage on a bilateral Comprehensive Economic Cooperation Agreement (CECA). Subsequently at the India-Australia Joint Ministerial Commission meeting in September 2021, Ministers Dan Tehan and Piyush Goyal formally relaunched CECA negotiations and reaffirmed their commitment to conclude an interim agreement by December 2021 to liberalise and deepen bilateral trade in goods and services, and to conclude the negotiations on a full CECA by the end of 2022.

The two countries made meaningful progress to advance defence cooperation including the signing of a mutual logistics support arrangement, and an agreement to support collaboration between defence, science and technology research organisations in both countries to work together to reduce supply chain vulnerabilities.

India was Australia’s seventh-largest trading partner and sixth-largest export market in 2020, driven by coal and international education. Education is Australia’s largest service export to India, valued at $6 billion and accounting for around 88 per cent of the total in 2020. Two-way goods and services trade with India was $24.4 billion in 2020. India is an awakening giant with a population of over 1.3 billion.

The country’s relatively young population with a median age of 28.4 years and projected rapid growth present significant trade opportunities for the Australian economy across sectors such as education, agriculture, energy, resources, tourism, healthcare, financial services, infrastructure, science and innovation and sport.

India has a central role in the Indo-pacific region and in the emerging digital world with a focus on critical and cyber technologies. The present changes in technology are rare and once in an era!

The digital age is changing everything around us. Technology is the major instrument of global competition and the key to shaping the future world order. The threats too are unique to our times, from the sea bed, to cyber to space. The new threats come from technology and data when in the hands of adversary.

Australia considers India as a major technological power and a global research and development hub. High tech industries like biotech, medical equipment, aerospace are producing numerous innovations and attracting significant investment in R & D from around the world. Technology is at the forefront of the Comprehensive Strategic Partnership between India and Australia. India is already making significant progress in critical and emerging technologies, critical minerals, cyber security, digital economy, space science.

Relevant portion of Innovation & Entrepreneurship of the Comprehensive Strategic Partnership for enhancing trade partnership are – “Both sides committed to continue fostering collaboration between entrepreneurs, developing innovative products and promoting start-ups and incubation centres. Both sides committed to enhance cooperation in the Micro, Small and Medium Enterprises (MSME) sector and decided that major industries of both countries should endeavour to integrate the SME/MSMEs of the other country into their supply chains, thereby diversifying
bilateral trade. Both countries jointly decided to take forward SME/MSME cooperation including through the Australia India Business Exchange program.”

India has the world’s third largest and fastest growing start-up ecosystem in the world with new unicorns coming up every few weeks. They provide solutions to everything from health, education, agriculture, defence, clean energy transformation and protection of bio-diversity.

India is making huge investment in developing capabilities in telecom technology such as 5G and 6G. It is one of the leaders in AI and machine learning; especially in developing in cloud platforms and cloud computing. India’s space program is now open to innovation and investment for the private sector. India leads in providing cyber security to businesses around the world. A task force is being set up to make India a global hub for cyber security. The next step is to focus on the hardware – and India is on its way to be the key manufacturer of semi-conductors.

Globally the most important output from digital technology is data. And data protection is the biggest challenge for which India has a framework of protection and maintenance of privacy and data security. India’s expertise in the most futuristic of technologies, its trusted manufacturing base, well developed supply chains makes it reliable global partner for doing business.

China, the hitherto most important trading partner of Australia, is out of favour. The 2021 Lowy Institute Poll indicates the dramatic decline in the Australian public’s assessment of China.

In 2018, while 52% of respondents said they trusted China to “act responsibly in the world” either “a great deal” or “somewhat” , in 2021 only 16% did so. Similarly, for the first time in 2021 almost two-thirds of the respondents (63%) view China as more of a security threat than an economic partner. In 2020, 61% of Australians said they trusted India “a great deal” or “somewhat” to act responsibly in the world, up from 45% in the previous year and on par with their views of the United States.

These positive vibes in relation to Australia-India relations have been the most important factor for the incorporation of India Australia Business Forum Inc (IABFI) in Sydney.

*******************