India- Australia Relations (A road map for robust trade ties)

India- Australia Relations (A road map for robust trade ties)

➢ India and Australia share a strong bilateral relationship based on historical ties, cultural links and
extensive people-to-people connections.
➢ As large democracies, the two countries play a central role in strengthening geopolitical cooperation
and maintaining peace and security.
➢ Historically, India-Australia relations suffered from deep structural impediments.
➢ The first was the logic of the Cold War, during which Australia decided to be among Britain and the
United States’ closest allies, while India initially opted for non-alignment.
➢ This led to a number of disagreements and misunderstandings.
➢ As India achieved Independence, for example, Australian leaders advocated to their British
counterparts that the strategically important Andaman and Nicobar Islands be retained by the
➢ The second complicating factor was India’s nuclear status outside the nuclear Non-Proliferation
Treaty (NPT).
➢ This resulted in Australia taking a particularly strong stance against India’s 1998 nuclear tests, which
came soon after French nuclear tests in the South Pacific.
➢ However, the 2008 waiver granted to India by the Nuclear Suppliers Group, the subsequent lifting by
Australia of its uranium ban against NPT non-signatories, and a bilateral civil nuclear agreement in
2014-2015 largely addressed the matter.
➢ Third, the relationship historically suffered from a lack of economic content. This has changed.
➢ India is one of the largest export destinations for Australia, and Australia is a top 20 trade partner for
➢ Yet, merchandise trade remains below potential.
➢ Fourth, the relationship was previously held back by an absence of people-to-people content.

➢ In recent years, however, Indian immigrants have been among the largest contributors to Australia’s
population growth.
➢ In addition to the massive influx of Indian students, Indian tourists are also visiting Australia in
larger numbers.

Strategic Side:

➢ India-Australia relations have experienced a major upswing. This is evident in a growing number of
military exercises involving all three services, as well as staff talks and military training initiatives.
➢ In 2019, the countries took part in large-scale anti-submarine warfare exercises in the Bay of
➢ The establishment of a bilateral 2+2 dialogue (involving senior foreign and defence ministry officials)
represent more heft and purpose in strategic coordination.
Trade relationship
The trade between the two countries has been at a modest $31 billion, largely composed of resources like
coal and other minerals.

Issue Area:

➢ Negotiations on a Free Trade Agreement, which began in 2011, have not moved forward
➢ It is important for India to concentrate on various underdeveloped and undervalued sectors such as
agriculture, education, tourism and services.
➢ Adani Group’s coal project in Australia has been hampered by regulatory delays and difficulty in
securing financing amid a passionate environmental protest movement.
India Economic Strategy 2035 Report
➢ It was prepared by former Foreign Secretary of Australia Peter Varghese for the government of
Australia which lays down a comprehensive road map for strengthening Australia’s trade engagement
with India.
➢ This report recommends that Australia strive by 2035 to lift India into its top three export markets,
to make India the third-largest destination in Asia for Australian outward investment, and to
bring India into the inner circle of Australia’s strategic partnerships, and with people to people ties as
close as any in Asia.

Entrepreneurship and Digital Technology:

➢ India-Australia trade has been steadily evolving into a new architecture underpinned by
developments in digital technology, the rise of a younger generation of entrepreneurs, and a
noticeable shift in the trade basket from resources to services.
➢ Technology and young entrepreneurship make a formidable combination and should set the agenda
for the future of bilateral trade relations.
➢ About 80% of the Australian small and medium-sized enterprises are managed by young
➢ Young Australians, like young Indians, carry the compelling vision of 21st century globalization,
multiculturism and quality education.
➢ What adds strength to this process is a great deal of social engineering, people-to-people contacts,
and knowledge partnerships.
➢ The young can see issues like immigration and outsourcing with far more equanimity than the older
➢ Young Australians are thus emerging as great champions of India-Australia trade relations.

➢ There is also recognition that Australia is a laboratory of ideas, innovation, technology-led growth
and university-industry partnerships. India is a large and demographically young market with a love
for innovation and an appetite for new products and services. These synergies should add
momentum to a growing engagement in trade relations.
➢ The weakest link in India’s exports to Australia is in merchandise.
➢ First, despite globalization, markets are country-specific and culturally sensitive.
➢ Indian companies will need to invest a little more in market research on Australian consumer
expectations and lifestyles before their products can successfully penetrate the Australian market.
➢ Second, Australia is a brand-conscious market while India has not created a single consumer brand
of international acceptance.
➢ Only when India’s textiles, leather products, cars and two-wheelers, kitchen equipment and other
products are visible across the world’s shopping malls and supermarkets displaying their own brands,
that India will be recognised as a major player in the global markets.


➢ Thus innovation is key for the success of global trade.
➢ The future must be woven around the three pillars, which are economic relationship, geostrategic
congruence and people⎯to⎯people ties. The glue that can bind this is a sustained momentum.

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