India has had a strong track record of both economic growth as well as social development led by a stable Government in its second term, re-elected largely due to its pro-business policies, enhanced governance and an ambition of improving the perception of India as a reliable partner for bilateral trade and investment. Australia’s robustness in business can be attributed to strong governance that results in a stable and transparent work environment. This is augmented by research and development across sectors, which support innovation and an entrepreneurial spirit.
India and Australia have more in common than what meets the eye. Both are characterized by the presence of free media, multi-faceted cultural societal structures and an abundance of natural resources. At a fundamental level, both are liberal democracies, inherited from a shared British colonial past.
The potential to strengthen the relationship between India and Australia has not been fully harnessed due to an inadequate awareness of business opportunities on both sides. While large Indian companies have shown interest in investing in Australia, the overall investment levels have been lower than the investments made by other economies like China and Japan. Similarly, India’s share in Australian imports has also been low over the years, as compared to other large developed or developing economies.
Since 2011, Australia and India have been negotiating a bilateral free trade agreement — termed the Comprehensive Economic Cooperation Agreement (CECA). The two countries have also been part of the Regional Comprehensive Economic Partnership (RCEP) negotiations, which was concluded at the Third RCEP leaders’ summit held at Bangkok on 4th November 2019. India has communicated its intention to not participate in the RCEP in its current form. This development further necessiates a strong bilateral partnership for Australia and India to capture economic opportunities. With the existing federal Governments in both India and Australia now entering the second term, there is a strong reason to believe that this is perhaps the ideal time to conclude some of these discussions with concrete steps detailing the actions that are required by each partner.
The bilateral trade in goods and services between the two countries was USD 23.3 billion in 2018. India can leverage its strengths in key commodities such as refined petroleum products, pharmaceuticals and bio- similars, passenger/ commercial vehicles, agricultural commodities such as rice and fruit, renewable energy, railway equipment, gems and jewelry, textiles, etc. to target a higher wallet share in Australia’s goods imports. There is significant room for growth of Indian services exports to Australia. India has the potential to increase its exports of goods and services to Australia from USD 5 billion in 2018 to USD 15 billion in 2025 to USD 35 billion in 2035. This would mean that India’s goods exports to Australia could grow from USD 3.7 billion in 2018 to USD 10 billion in 2025 to USD 20 billion in 2035. This would also mean that India’s service exports to Australia could grow from USD 1.7 billion in 2018 to USD 5 billion in 2025 to USD 15 billion in 2035.