India's Australia Economic Strategy: A big push to bilateral trade

The much-awaited Government of India (GoI) 'Australia Economic Strategy' (AES) report, authored by Anil Wadhwa, Former Secretary (East), Ministry of External Affairs (MEA), was recently released in the presence of Commerce and Trade Minister Piyush Goyal, along with the High Commissioner of India to Australia A. Gitesh Sarma, and Deputy High Commissioner of Australia to India Rod Hilton.

India's AES is a reciprocal report to Australia's 'India Economic Strategy to 2035' (IES 2035), authored by Peter Varghese. The IES2035 earlier had set a target for India to become one of Australia's top three export markets, to make India the third-largest destination in Asia for Australian outward investment, $100 billion by 2035, and a bigger, better trade basket with balanced trade relations between both countries. AES is one of its kind report, first ever attempted by the GoI for any specific country.

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The need to "catch up" has to be complemented with precise action. The two reports (IES 2035 and AES) together create a perfect roadmap for future economic engagement between India and Australia. The shift that's categorically needed for Australian businesses is from "Why India?" to "How-to in India?"

•  First, both countries need to be mindful of their contemporary realities, needs, compulsions, and limitations, which could address the sticking points of Free Trade Agreement (FTA) between them, which includes India's demand for free movement of professionals versus Australia's demand for enhanced agriculture market access in India. Goods, services, and investment-focused FTA with Australia will boost key Indian exports like textiles, clothing, auto parts, and jewellery. It will also facilitate investment flows with Australia, which has the world's third-largest pool of investment funds under management. An FTA could deliver businesses' confidence about the operating environment. According to the Joint Study Group (JSG) report, the welfare gain from the FTA could be in the range of 0.15 and 1.14% of GDP for India and 0.23 and 1.17% for Australia. 

• India is exporting only 10% of its GDP and is heavily dependent on domestic consumption. Australia's advanced manufacturing accounts for around half of Australia's A$100 billion-plus annual manufacturing output and is one of the fastest-growing export sectors. Part of this success is due to cross-fertilisation between R&D institutions and the manufacturing sector. India can explore synergies with Australia in advanced manufacturing as part of 'Make in India 2.0' (which includes segments such as robotics, AI, genomics, chemical feedstock, and electrical storage). Advanced manufacturing technologies today are vital to gain global competitiveness in cost, speed, innovation, and quality. Australia's advanced manufacturing expertise can help build India's export-led growth strategy.

• Australia is a recognised global leader in Mining Equipment and Technology Services (METS) while India lags behind other mining countries across all stages of mining-geoscience, exploration, development, production, and reclamation. The Australian METS sector has a number of comparative advantages, which if utilised properly can offer a range of solutions to the mining industry in India. The first India-Australia Critical and Strategic Minerals Joint Working Group, held in November, has agreed on actions and next steps to be delivered over the coming year, in relation to supply-demand data sharing, investment activities, and R&D.

This is a significant step in implementing the Memorandum of Understanding on Critical Minerals between India and Australia. The success of India's e-mobility, renewable goals primarily depends on the availability of these critical minerals. The growing significance of these minerals is demonstrated in their use in the manufacture of mobile phones and computers, flat-screen monitors, wind turbines, electric cars, solar panels, rechargeable batteries, space, and defence-industry technology and products.

Australia has released a list of 24 key critical minerals where it can emerge as a potential supplier, along with a list of critical minerals projects in the country, which offer off-take and investment opportunities for public and private sector organisations across the world.

India's public and private sector, along with its government consortium (KABIL) on critical minerals, can look at these assets to secure future supplies and build an efficient energy economy and futurecompetitiveness. Mining and Resources is Australia's number 1 sector, in attracting outward investments because of its conducive doing business environment supplemented by policy certainty.

• The discourse on education partnership between both countries must go beyond enrollment numbers and look at capacity-building partnerships. There is a need for reskilling, upskilling, and deep-skilling. India's 'New Education Policy' also focuses on Education Quality Upgradation and Inclusion Program (EQUIP) to transform higher education in India through joint collaborations in Science, Technology, Engineering and Mathematics (STEM) and creating institutes of excellence and global competence within the country.

• India and Australia can combine complementary skills and expertise to develop new innovations by leveraging Australian expertise in areas such as agri-tech, health-tech, water management, food processing, food storage, sports technology, energy efficiency, and renewables, with Indian expertise including in data analytics, biotech, and mobile applications.

• The missing ingredient in this mix of economics and geopolitics is deeper cultural understanding. Colonial history and subsequent postcolonial identities marred by outbursts of Australia's cultural superiority have played a significant role in fracturing Australia-India ties. More people-to-people interactions and educational partnerships must be enhanced to address this challenge. The changing world must make an effort to understand the new India better. Hence, a crucial role for the 700,000 strong Indian-origin population residing in Australia, and how it manifests itself in building a talent reservoir for new world needs.

The opportunity will not come to Australian businesses, they must be sought out actively and assertively. Curiosity and continuity are key. The word "engagement'' is crucial which should become a permanent national project for both countries. Let's hope that the quality of the relationship will catch up with its ambition, share the relentless spirit and ethos of cricketing ties between the two countries, and bolster economic ties as well.

(Natasha Jha Bhaskar is General Manager of Newland Global Group, a corporate advisory firm specialising in the Australia-India space, based in Sydney)