All eyes have been on India as Prime Minister Turnbull wraps up his tour this week. The visit has promised a new commitment to cooperation between both countries extending beyond the traditional commonalities of cricket and Commonwealth.
The Prime Minister’s economic agenda around energy and education has revitalised a dialogue that stalled along with free trade negotiations in the middle of last year. The postponement, brought about by a disagreement over Australian immigration policy and Indian agricultural tariffs, has been to the detriment of both economies. The regulatory restrictions and uncertainty has left bilateral trade stagnant at AUD 20 billion.
This is a staggering shortfall in our relationship with the world’s second most populous country, exemplified by the AUD 150 billion in bilateral trade we conduct with China each year.
However, this does not mean that a free trade agreement is the only solution. Indeed, with continued market protection in India and tight visa controls in Australia it is an unlikely solution in the near term. Instead Australia must focus on continuing to demystify the Indian market and plan medium to long term strategies for enhancing bilateral trade and investment, realising the mutual benefits therein.
This week’s Prime Ministerial visit highlighted the opportunity to initiate a broader dialogue with Indian businesses and consumers to capture some of the untapped benefits of economic cooperation.
So what are the opportunities for bilateral trade and investment?
Whilst Australia has traditionally focused on exporting agricultural goods and commodities such as coal and uranium, it is education which presents itself as the dominant opportunity in 2017. Education-related travel is Australia’s largest service export and India is our second largest source of foreign students. We must focus on fostering this export relationship and leveraging the connections and reputation we have to achieve even broader economic outcomes across a range of other industries and sectors.
The 60,000 Indian students that study in Australia at any given point in time must be thought of as more than a tuition fee. They are part of the solution to our IT skills shortage, the foundation of future business connections and a gateway to better understand each other’s consumer markets. With over a million people turning eighteen every month, Australian universities are important for developing a trade and investment relationship that harnesses India’s growing consumer demand and expanding middle class.
However, students are not the only pathway to broader economic connection. Our existing and future cooperation in Indian mining investments is critical to the bilateral relationship as India strives to achieve energy security. The opportunities to collaborate in IT and advanced manufacturing are also immense with far reaching benefits for both countries through leveraging complementary expertise.
The Australian Government must recognise these projects as an opportunity to fulfill the promise of its innovation agenda and incentivise Indian businesses to invest in Australia.
Thus the opportunities for Australia-India business cooperation are broad and the benefits substantial. Whilst many businesses will need professional help to forge partnerships, our foundation of trust is already growing into a broader understanding of the mutual economic and social benefits from cooperation. This has set a platform for trade and investment even for companies with no prior connection to the Indian market.
By focusing on the right market entry strategy, businesses can capitalise on industry growth without being overwhelmed by the scale of the country or government projects. This requires not only the right government and business connections but also the right market and city for investment. Once these factors are considered and the tax and regulatory framework is understood, the process of building collaborative partnerships to harness Indian growth is achievable.