With China ties still thawing, Australia looks to double India trade
Australia is eyeing India’s burgeoning middle class to help offset the economic damage wrought to some of its major exports by the twin headwinds of Covid-19 and heavy restrictions imposed by its biggest trade partner, China.
With a middle-to-high income population of about 85 million people, according to Pew Research, roughly three times Australia’s total population, India is seen as a prime target for sectors from education and minerals to tourism and wine, all of which were hit badly by the pandemic and worsening relations with China.
Bilateral trade is expected to more than double to around A$60 billion over the next five years, after a pact that cuts or eliminates tariffs on a number of goods and services, and gives greater recognition of professional qualifications, comes into place on Dec 29.
While that is still just a sliver of Australia’s two-way trade of A$280 billion with China, India is widely recognized as a huge piece of the country’s diversification puzzle.
Australia’s efforts are paying off, just as its relationship with China is also showing signs of thawing. Between April and October this year, India’s imports of Australian goods climbed to US$12.3 billion, up 48 percent from a year ago.
The mood is buoyant and Dr Ajay Sahai, director-general of the Federation of Indian Export Organisations, expects to see a further boost in coming years.
“Coal, copper, aluminium, cobalt we can see a sizable jump in all of this. Wine imports too would go up,” Dr Sahai said in an interview, referring to the potential benefits from the deal.
Australia, where the Indian diaspora represents about 3 percent of the population, established the Centre for Australia-India Relations in 2022 to promote policy dialogue and administer scholarship and fellowship programmes, among other things.
India and Australia are also part of a multi-year programme to help Australian businesses compete in India and will this year host a leadership dialogue, with Indian Prime Minister Narendra Modi likely in attendance.
Here are four sectors poised to benefit from stronger Australia-India ties.
Education
Universities expect to see a further jump in demand from India as under the new trade agreement, Indian graduates from select streams will qualify for the right to stay in Australia for longer to work, as well as the promise of mutual recognition of education qualifications.
Tourism
Tourism is another sector in which Australia is anxious to entice India’s burgeoning middle class. Its efforts seem to be working, with the latest data in December showing that India was the second-largest source country of visitors after New Zealand, replacing China in the top five list.
Critical minerals
Australia has 21 out of the 49 minerals that have been identified in India’s critical minerals strategy so there is a “perfect marriage in their efforts to de-carbonise their economies,” said Lisa Singh, chief executive of Melbourne-based Australia-India Institute and deputy chairman of the Australian government’s Australia-India Council.
Wine
India’s budding wine market is projected to grow 8 percent a year to 2024, off a low base, said government agency Austrade. The bilateral trade pact will slash tariffs on Australian wine, giving it a further boost. The trade deal is also expected to improve access for other Australian sectors including pharmaceuticals, cosmetics, lentils, sheep meat and horticulture exporters, said Trade Minister Don Farrell.