India & Australia Relations


India, Australia sign FTA, trade likely to ‘double in 5 years, generate 1 million jobs

India & Australia Relations Background

  • The India-Australia bilateral relationship has undergone an evolution in recent years, developing along a positive track, into a strategic partnership.
  • The two nations have much in common, underpinned by shared values of a pluralistic, Westminster-style democracies, Commonwealth traditions, expanding economic engagement and increasing high level interaction.
  • The historical ties between India and Australia started immediately following European settlement in Australia from 1788. All trade to and from the penal colony of New South Wales was controlled by the British East India Company through Kolkata.
  • India and Australia established diplomatic relations in the pre-Independence period, with the establishment of India Trade Office in Sydney in 1941.
  • The end of the Cold War and simultaneously India’s decision to launch major economic reforms in 1991 provided the first positive move towards development of closer ties between the two nations. With the passage of time, the relationship gained momentum towards a strategic relationship, alongside the existing economic engagement.
  • India-Australia Strategic Relationship: With the changing global scenario, Australia has come to look at India as an important partner in promoting regional security and stability. This led to up gradation of bilateral relationship to a ‘Strategic Partnership’, including a Joint Declaration on Security Cooperation in 2009. Over the years an array of institutional mechanism has been put in place to promote bilateral co-operation.
  • Bilateral mechanisms include high level visits, Annual Meetings of Prime Ministers, Foreign Ministers’ Framework Dialogue, Joint Trade & Commerce Ministerial Commission, India-Australia ‘2+2’ Foreign Secretaries and Defence Secretaries Dialogue, Defence Policy Talks, Australia-India Education Council, Defence Services Staff Talks, Energy Security Dialogue, JWGs on different issues etc.
  • Australia’s White Paper on Foreign Policy released in November 2017 sees India in the front rank of Australia’s international partnerships. It says, “Beyond an increasingly important economic relationship, our security interests are congruent, particularly in relation to the stability and openness of the Indian Ocean. Both the countries have common interests in upholding international law, especially in relation to freedom of navigation and maritime security”.

Growing people-to-people ties

  • There are many citizens in Australia with Indian origins. Out of the country’s 24 million people, about half a million are of Indian origin.
  • The fastest-growing language in Australia is Punjabi.
  • As of 2017, more than 60000 students from India are studying in Australia.
  • More than 2 lakh Indians visit Australia every year.

Defence Cooperation

  • The defence cooperation extends to research, development and industry engagement.
  • Regular meetings at the level of the Defence Minister. Shri A K Antony, Former Defence Minister was the first Defence minister to visit Australia. Rajnath Singh, Defence Minister is visiting Australia in November as both countries are emerging close strategic partners in Indo-Pacific region to contain rising China.
  • Strengthening cooperation and exploring training avenues with Australia’s Maritime Border Command and conduct regular maritime exercises. Bothe navies have recently participated in each other’s naval exercises. AUSINDEX 2019 was held off the coast of Vishakhapatnam from April 2019.

The Quad:

  • The informal strategic Quadrilateral Security Dialogue (QSD) that was initiated by Japan’s Prime Minister Shinzo Abe in 2007 was largely in response to China’s growing power and influence.
  • Initially, the “Quad” members included India, Japan, the US, and Australia; however Australia chose to withdraw when Kevin Rudd was Prime Minister, since it did not want to be a part of an anti-China alliance at the time.
  • However, Australia later re-joined the dialogue in 2017 on the side-lines of the ASEAN Summit, signalling a re-ignition in Australia’s interest in the dialogue.

Economic Relations

As of the year 2016, the bilateral trade between the two nations is worth A$21.9 billion. This has grown significantly since 2003 when the figure stood at A$ 4.3 billion. India’s export of goods to Australia in 2011-12 was A$ 2.49 bn (US$ 2.60 bn) and India’s import of goods was A$ 13.11 bn (US$ 13.71 bn). India’s export of services was A$ 0.80 bn (US$ 0.84 bn) and import of services was A$ 1.9 bn. (A$ 2.0 bn). India is Australia’s largest export market for gold and chickpeas, the second-largest market for coal and copper ores and the third-largest market for lead and wool. Four products – coal, non-monetary gold, copper ores & concentrates and petroleum – accounted for over 80 per cent of India’s imports from Australia, with coal and gold being the dominant imports in 2011-12. India is Australia’s tenth largest trading partner and the fifth-largest export market.

Major Australian Imports to India

  • Coal
  • Services (chiefly education)
  • Gold
  • Copper ores and concentrates
  • Vegetables for consumption by consumers

Major Indian exports to Australia

  • Refined petroleum
  • Services (such as outsourcing)
  • Pearls
  • Gems
  • Jewellery
  • Medicaments

Both countries have established a Strategic Research Fund for $100 million.

Uranium Import

In 2017, Australia shipped its first supply of uranium to India, after a deal which was signed in 2014. This is significant and can go a long way towards strengthening the relationship between the two countries. This is the first instance in which Australia is supplying uranium to a country that has not signed the Non-proliferation Treaty (NPT). This is also significant for satisfying India’s increasing energy requirements.

Agriculture, Science and Technology

  • A number of collaborative research projects in agricultural research, astronomy and astrophysics, environmental sciences, microelectronics, nanotechnology, renewable energy, marine sciences and earth systems sciences have been taken up.
    • An Australia-India Strategic Research Fund (AISRF) has been set up to fuel research and development
    • Each country contributed A$ 65 million over a five year period.
    • Australia is also cooperating in our Clean Ganga Project
  • Resources and Energy Security
    • Joint Working Group on Energy and Minerals was established in 1999 to expand bilateral relationship in the energy and resources sector.
    • During the visit of our Prime Minister Modi to Australia in November 2014, both countries agreed to cooperate on transfer of clean coal technology.
    • The resources and energy policy developments and reforms, including opportunities and challenges in mining, petroleum and gas, power, new and renewable energy, as well as challenges in skills, science and innovation and infrastructure have been discussed too.
    • Australia signed a framework agreement for Australia to join the International Solar Alliance, led by India and France in 2017.

Education, Sports, Art and Culture

  • The Joint Working Group on Education has identified several key areas for co-operation, including collaborative research in education policy, student exchange programmes, capacity building in vocational education and distance learning in higher education.
    • Cooperation between Australian and Indian Universities and in particular, Joint PhD Programme to encourage research, promote school level cooperation under which an Australian team can come and study 5-7 States in India and promote Universities tie-ups.
    • Australia has also agreed to help in establishing a Sports University in India.
    • An MoU in the field of Tourism was signed between the two countries during the visit of PM Modi to Australia in November 2014, which is expected to promote and support the growth in the Tourism Industry.
    • Confluence, Festival of India in Australia, is first-of-its-kind Indian music and dance festival in Australia. The purpose of the festival is to showcase India’s rich and diverse culture. The festival is an initiative of Indian government supported by the Australian side. Confluence 4 will be held in November 2019.

Indian diaspora in Australia

There is a fast-growing Indian community of nearly 295,000 residing in Australia. This is not including the people of Indian origin from other countries such as South Africa, Fiji, Malaysia, Kenya, etc. who have migrated to Australia. They are significant contributors to the Australian economy as teachers, accountants, doctors, engineers and I.T. professionals. India is now the third-largest source of immigrants to Australia, after the UK and New Zealand and the second-largest source of skilled professionals.

Need for Strengthening Relations with Australia

  • To counter China’s rising maritime influence, India needs Australia in Quad to balance China in the Indo-Pacific region. Both India and Australia view it as one of many plurilaterals to keep the Indo-Pacific region stable. Both the nations can therefore serve together as the net security provider in the region.
  • To emerge as a political power in the region, India needs to strengthen its relations with Australia to work on common issues like transnational crime, terrorism, people smuggling, and illegal fishing.
  • To make India world’s manufacturing Hub under ‘Make in India’ programme it can significantly use Australian expertise in the field of health, education and tourism.
  • India needs Australia in the skill development of its largest demographic dividend in the world. Australia is well-equipped to assist India in knowledge-sharing, education and skill development. The two countries also have enormous potential to build on their people-to-people links and thus their soft power influence.
  • India is the third largest source of immigrants to Australia and the second largest source for skilled professionals. This should give sufficient impetus to build a public understanding of each other and thereby improve public policy.
  • There is a great scope for regional economic integration in the Indo-Pacific, one of the most flourishing trade zones in the world. The Regional Comprehensive Economic Partnership (RCEP) is a good platform for India to work towards the goal of regional economic development, since India is not yet a part of the Trans-Pacific Partnership (TPP-11 or CPTPP).
  • Trilateral engagements with crucial nations like Indonesia and Japan and deeper engagement with regional groups like the Indian Ocean Rim Association and East Asia Summit will also strengthen the ties between India and Australia.

India Australia Prospects and Future Challenges

  • Energy sector – Australia is poised to overtake Qatar as the largest exporter of Liquified Natural Gas (LNG). India can diversify the sourcing of its LNG supply with Australia (reducing dependency on West Asian countries) and reap huge benefits from a long-term relationship. This is in addition to the already-blooming relations in the nuclear fuel supply domain.
  • Comprehensive Economic Cooperation Agreement (CECA) – Negotiations for a CECA started in 2001. If this is materialised, India will have better access to the world’s 12th largest economy. Half of India’s exports to Australia face stiff tariffs, and if the CECA is made, Indian businesses would be in the same footing as other FTA partners of Australia such as China. This would also improve investments from Australia, which has the third-largest pool of investment funds under management in the world.
  • Why CECA is in a deadlock
    • India is opposed to greater access for Australian businesses in the sector of dairy and agricultural markets in the interests of its small and marginal farmers and people working in the dairy industry.
    • India wants greater free movement and relaxed visa norms for its IT professionals, which Australia is reluctant to agree to cite local unemployment as the reason.
    • India wants Australia to soften its high non-trade barriers for Indian products.
    • India is reluctant to open up its doors for legal services from Australia.
    • There is also no concrete agreement on greater market access for Australia’s wine, meat, auto components and financial services industries.
    • Both countries also differ in their preference towards Rules of Origin (ROO) in fixing the tariff lines for goods.

Way Forward

  • The India-Australia relationship was often labeled as “one step forward, two steps back” is changing as Australia’s economic strategy for India recommended that India should be put in its top three export markets and be made the third largest destination in Asia for the country’s outward investment.
  • The positive shift in relations since 2014 after a gap of 28 years should be continued and extended to all areas. India no longer sees Australia at the periphery of India’s vision but at the center of its thoughts.
  • There is opportunity as well as challenge in the strengthening of India-Australia relationship. However, the three pillars in the form of economic relationship, geostrategic congruence and people-to-people ties should be strengthened to keep the momentum in the ties.

Source: Indian Express

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