The growing partnership between Canberra and New Delhi will be a boon for both countries. For Australia, a burgeoning Indian economy and middle class hold many opportunities for future investment and economic development.
Australia-India relations received a major boost recently with the state visit of Prime Minister Anthony Albanese to India (March 8-11) and his meeting with Prime Minister Narendra Modi at the First India-Australia Summit Meeting. The two parties underscored the fact that the Comprehensive Strategic Partnership (CSP) between the two countries cuts across many sectors, including trade and economy. At the Summit Meeting, both PMs reached an agreement to deepen the CSP. According to the joint statement released during the summit conference, the two prime ministers discussed potential areas of collaboration on regional and global issues of common interest, defence and security cooperation, expressed appreciation for the ongoing momentum in bilateral and multilateral cooperation, and emphasised the strength of the multifaceted bilateral partnership that has resulted from the CSP.
However, the major focus was on enhancing the trade between the two countries. This was apparent from the sizeable corporate delegation that Albanese travelled with, in addition to the Minister of Commerce and Tourism Don Farrell and Minister of Resources Madeleine King. The main Australian exports to India have historically been resources, tourism, and education, but recent efforts have concentrated on fostering business relationships in a number of untapped sectors. A milestone achieved during this visit was the inauguration of a Deakin University campus in India (the first foreign university to have such rights).
One of the key actions taken during the summit was the two prime ministers’ stated aim to conclude an ambitious and comprehensive trade pact by the end of 2023, after more than a decade of drawn-out discussions. In 2022, India and Australia signed the Economic Cooperation and Trade Agreement (ECTA) to unlock new potential in trade and investment. This has indeed helped both nations enhance mutual trade, which has historically been small (with Australia enjoying a trade surplus). But both Albanese and Modi view the ECTA as a game-changing pact that will open up new opportunities for trade and investment.
Discussions for the far larger CECA, which began in 2011, were suspended in 2016 due to lack of progress. Resuming in 2021, the negotiations still have some way to go. Over the past 10 years, several rounds of discussions between Canberra and New Delhi have been held. When CECA is finished, tariff barriers will be reduced, commercial ties will be strengthened, jobs will be created, living standards of citizens in both nations will rise, and this will help build a resilient global supply chain.
On a substantially more positive side, the two countries committed to major initiatives in the area of green technology and renewable sources of energy, particularly hydrogen. In 10-15 years, the development of such technologies are likely to be key sources of not just energy growth but also economic and industrial development more broadly.
One of the highlights of the visit was Albanese’s address to India-Australia CEO conference in Mumbai, where he expressed his genuine gratitude for the significant number of Australian investors who visited India. This conference was attended by Indian Union Minister Piyush Goyal and Senator Don Farrell, minister for Trade and Tourism in the Australian government. The CEO Forum was organised by the Department for Promotion of Industry and Internal Trade (DPIIT) and Ministry of Commerce and Industry, along with the Confederation of Indian Industry (CII). CEOs of top firms from Australia and India participated in the event from the banking, aviation, education, IT, auto, food processing, pharmaceutical, healthcare, and medical device industries, as well as institutional investors who are going to be important actors in the two countries’ goals of doubling trade.
In the presence of Albanese, a four-year extension of the Memorandum of Understanding was signed between the Business Council of Australia and the Confederation of Indian Industry. The CEO forum reaffirmed the potential for expansion in the trade and investment between the two nations.
With the upgrade of the 2009 Strategic Partnership to a CSP in June 2020, relations between Australia and India continue to improve. In the past, issues such as India’s non-signatory status to the nuclear non-proliferation treaty, Australia’s conflicting stance on the delivery of uranium to India, and challenges to the Adani Carmichael mining project were the main causes of the lack of mutual trust, which hampered the pace of commercial ties between the two nations. Both have since helped to close the trust gap through increased participation at the highest levels, including summit meetings. The high-level political and official visits and discussions will increase the exchange of goods, services, ideas and professionals. They will also grow trade and dispel possible misconceptions that would otherwise stymie Australia and India’s economic relationships.
Although Australia and India are not each other’s top trading partners, two-way trade between the two is expected to increase significantly. Despite India’s refusal to sign the Regional Comprehensive Economic Partnership (RCEP) agreement, Australia and India have worked jointly to take advantage of expanding commerce and investment in the region. In particular, the foreign direct investment (FDI) regime in India has undergone significant liberalisation, which has become more encouraging for Australian businesses. Businesses in India also have various new opportunities thanks to Australia’s open FDI policy. For Australia especially, India presents enormous commercial opportunities and possibilities due to its size, rapid middle-class expansion, and expanding desire for a better standard of living.
The latest summit meeting and economic forum talks will help both nations enhance economic, trade, and investment ties. The timing of the visit is significant in view of both countries’ strained relations with China, the uncertainty associated with some global supply chains, and the realisation of the complementary nature of the Australian and Indian economies. The two governments have opened significant doors for businesses and consumers in both countries – it is for the latter to accelerate the momentum further.
Professor Raghbendra Jha is Emeritus Professor of Economics at the Arndt-Corden Department of Economics at the Crawford School of Public Policy, the Australian National University.
Dr Ashok Sharma is a Visiting Fellow at the University of New South Wales, Canberra, at the Australian Defence force Academy. He is also an Adjunct Associate Professor at the University of Canberra and an Academic Fellow of the Australia-India Institute at the University of Melbourne.