Context

India and Australia are keen to move beyond mere rhetoric and build a robust partnership in the changing geopolitical scenario and come up with tangible commitments to a peaceful and prosperous Indo-Pacific.

Background

• In the present scenario, our relationship revolves around the free movement of people, goods, services, capital, and questions like economic sovereignty and self-reliance.
• It gets translated into new aspirations, new players and revised allegiances, brought together by the consequences of the pandemic.

Analysis

Overview of India-Australia Relationship:

• Australia and India established diplomatic relations in the pre-Independence period when the Consulate General of India was first opened as a Trade Office in Sydney in 1941.
• In March 1944, Australia appointed its first High Commissioner to India. India's first High Commissioner to Australia arrived in Canberra in 1945.
• In 2009, a ‘Strategic Partnership’ was established between the two countries and relations have significantly expanded since then. In 2013, A K Antony became the first-ever Indian Defence Minister to visit Australia.
• India is Australia’s seventh-largest trading partner and our sixth-largest export market in 2020.
• India’s export basket to Australia majorly comprises of goods like petroleum products, medicines, polished diamonds, gold jewellery, apparel etc., while key Australian exports to India include coal, LNG, alumina and non-monetary gold.

Non-monetary gold covers exports and imports of all gold not held as reserve assets (monetary gold) by the authorities. Non-monetary gold is treated as any other commodity and, when feasible, is subdivided into gold held as a store of value and other (industrial) gold.

India is deepening its engagement with Australia:

• Changing Global Dynamics: The India-Australia bilateral story is changing rapidly. The dynamic global geostrategic and geo-economics landscape is intensifying competition and redefining power, principles, and values on which the regional order should be based. The apparent barriers of the pandemic have provided a new kind of catalyst for greater connectivity, cooperation, and co-existence.
• Australia has reiterated its support for a free and open Indo-Pacific Ocean.
• And while doing so the Quad, has agreed to accelerate the delivery of COVID-19 vaccines across the region, address regional challenges including humanitarian assistance and disaster response (HADR), maritime security, counterterrorism, countering disinformation and cyber security.

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The Indo-Pacific Ocean is a common thread that comprises 38 countries, share 44 percent of world surface area, is home to more than 64 percent of the world’s population, accounts for 62 percent of global GDP with more than 50 percent of global trade traversing through its waters, highly heterogeneous with countries at different levels of development.

• India and Australia are both members of the Quad (Quadrilateral Security Dialogue) along with the US and Japan. Both countries have noted that the coalition has given impetus to increasing trade relations between all members of the Quad.
• Australia has also proposed to host an Indo-Pacific Clean Energy Supply Chain Forum in mid-2022.

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Indo-Pacific: The Indo-Pacific is a geopolitical construct that has emerged as a substitute to the long-prevalent “Asia-Pacific”, which represented the eastwards shift of global developments from the Euro-Atlantic dimension. Major stakeholders in the Indo-Pacific include- India, the U.S.A., Australia, Japan, the Association of Southeast Asian Nations (ASEAN) members and other maritime nations that occupy the strategic positions in the Indian and the Pacific Ocean including small island countries.

Contemporary development:

• The engagement on both sides has amplified across multiple platforms, clearly focused on building tangible commitments and actions, to embrace a win-win partnership.
• India has been supporting Australia on the issue of the South China Sea through improved bilateral relations. India is likely to strengthen its strategic partnership with Australia to counter China’s military and diplomatic aggression.
• India has extended the invitation to Australia and an Australian contingent in the 2020 Malabar exercise. Earlier India has resisted inviting Australia to the Malabar Naval exercise.
• India is seeking to deepen our bilateral trade and investment links through the conclusion of a Comprehensive Economic Cooperation Agreement (CECA).

India’s Interests:

• Geo-political aspirations: To expand its presence in the region, especially in Africa, the Middle East and Southeast Asia and maintain its role as a net security provider.
• Countering China: Ensuring that China does not gain a significant strategic foothold in the region.
• Enhancing Trade and Investment Cooperation: by encouraging the greater flow of goods, services, investment and technology between India and other countries in the region.
• Promoting sustainable development: In the coming times, climate change is set to adversely affect India.
• Other Interests: include- Combating marine pollution, Regulating illegal, unregulated, and unreported (IUU) fishing, deep-sea mineral exploration and effective disaster risk management.

Bilateral Economic and Trade Relationship:

• Economic Integration: It mandates greater physical infrastructure and connectivity between South and Southeast Asia. The Australian government will invest to promote infrastructure investment opportunities in the region to Australian business and to improve Australian resources and mining equipment, technology and services (METS).
• Critical Technology Cooperation: With the advent of industry 4.0, cyber security, innovation, digital economy, and cyber & critical technology cooperation have become a key part of Australia’s relationship with India, enabling an ecosystem of collaboration between industry, academia, and subject matters.
• Comprehensive Economic Cooperation Agreement (CECA): To advance the ongoing bilateral Free Trade Agreement negotiations, there is a likely possibility of a “full-fledged CECA” becoming a reality sooner than later.
• The CECA is likely to lower tariffs and provide greater access to Australian and Indian exporters in areas such as textiles, pharmaceuticals, footwear, dairy products, milk, premium wines and many more, focused on post-COVID economic recovery, along with the importance of an early resolution of the ongoing issue of taxation of offshore income of Indian firms in Australia.
• Both sides agreed that the long-pending free trade agreement, covering trade in goods and services, investments, etc. will be finalized by the end of 2022.

India aims to achieve a 5 percent share in world merchandise exports and 7 percent in services exports by 2025, which currently stands at 1.67 percent in global merchandise exports, and 3.54 percent in services.

• Tourism Cooperation: Both countries have renewed their commitment through an MoU on Tourism Cooperation, enabling tourism operators on both sides to take advantage of Australia’s international border re-opening to all fully vaccinated eligible visa holders, including tourists and business travellers.

Pre-pandemic, India was Australia’s fastest-growing source of international visitors. In 2019, almost 400,000 visitors from India visited Australia and spent a combined total of US $1.8 billion.

• Australia–India Infrastructure Forum: To promote two-way investment in infrastructure and support broader trade and investment bilateral objectives. The opportunities in urban infrastructure, transport, and water are the key focus sub-sectors for Australia in India.

Australia’s largest superannuation fund, Australian Super which has over US $200 billion of funds under management, has over one and a half billion dollars currently invested in India. With large sovereign funds, pension funds, private equity investing in India, and with infrastructure spending slated to be US$ 1.4 trillion by 2025 as part of the Govt. of India's national infrastructure, the future holds tremendous opportunities in the infrastructure sector.

• Maitri (friendship) initiatives: A series of three new Maitri initiatives to support our education, community, tourism and investments links will add to our growing bilateral relationship.
• Maitri Scholarships Programme: It will attract and support high achieving Indian students to study at Australian universities.
• Maitri Grants and Fellowships Programme: It will build links between our future leaders, supporting mid-career Australian and Indian professionals to collaborate on strategic research and shared priorities.
• Australia-India Maitri Cultural Partnership: It will boost the role of creative industries in our economic and people-to-people ties to promote artistic talent and cultural exchanges in visual and performing arts, literature, film, television, and music industries.
• Australia India Energy dialogue: Both countries have decided to drive down the costs of technologies that will help reduce global emissions, with a focus on tangible actions and projects including the manufacture and deployment of ultra-low-cost solar and green hydrogen.

Over 90% of solar cells globally use Australian technology. India in the next 10 years, will be one of the largest adopters of solar technology in the world and Australian and Indian innovators have significant potential to work together in this area. India’s National Hydrogen Mission could align well with Australia’s advanced technology in the hydrogen industry, as well as with India’s emphatic push on green transition in Union Budget 2022.

• Australia India Business Exchange (AIBX) program: To aid Australian and Indian business partnerships, the Australian Government has launched the Australia India Business Exchange (AIBX) program. Its objectives are:
• access the latest insights and opportunities
• establish valuable connections and partnerships
• compete and succeed in the Indian market.

Challenges

• The region faces a range of traditional security challenges that relate to issues of trust in the form of China which has emerged as a regional power and has little faith in rule-based order.
• There are also a growing number of non-traditional and transboundary security challenges, including terrorism, natural disasters and pandemics.
• India also faces unfavourable trade with Australia and despite opening talks for a comprehensive economic cooperation agreement in 2011, the agreement which would have significantly lowered the trade balance in favour of India has remained elusive.

Conclusion:

India and Australia share a truly comprehensive bilateral growth story that is driven by consistency, commitment, and action. The key lies in Australia and India thriving each other growth stories. It involves a holistic multi-stakeholder strategy and approach which deepens understanding and appreciation of each other. The future of our relationship will be primarily focused on scripting new and committed engagement narratives. The evolving narrative on the Indo-Pacific region reflects the emerging structural shift in geostrategic and geoeconomics imagination and environment that effectively forces a reimagination and discovery of new ways to grow and engage with the changing global reality.