Does It Finally Signal A New Dawn In The Australia-India Relationship?
Scott Morrison and Narendra Modi’s virtual summit on June 4 , in my view, has more potential to herald a new dawn in the bilateral relationship, especially in relation to business links, than any previous similar event !
On the surface, the business relationship would appear to be doing very well. In 2018, bilateral trade was worth $32.31 billion and investment stock $30.7 billion. However, given that India is the 5th largest economy in the world in nominal terms and 3rd largest in PPP terms, there is a huge gap between the actual and potential of the relationship. Australia is only India’s 20th largest trading partner and India ranks 6th among ours! When it comes to investment, India’s investment here ranks lower that 15th and ours in India only 18th.
Our exports to India are also limited to a few ‘easy’ sectors, mineral and agricultural resources accounting for most of our merchandise and international students and other tourism in Australia most of our services..
What characterises our exports is that they are extremely impersonal. We ship resources to them and deliver most of our education in Australia, neither requiring any Australian to go to India. To develop a better understanding of India, the Indian people, especially in government and business, we must go there and, preferably, experience living there.
The most frequent reasons given for the lack of an Australian business presence in India is that Australians are inherently risk averse and India too risky and difficult a place to do business in. Both arguments are highly questionable.
Australians are not risk averse. We herd to the most competitive market in the world, the US, in droves, despite the fact that the record of these ventures is littered with failure. Our small Aussie hi-tech battlers have flocked to the most competitive technology market in the world, Silicon Valley, in their thousands! There is also no doubt India is very challenging. Despite this, businesses from several countries, including some with a reputation for caution, including the US, UK, Japan, Korea, Switzerland, Italy and Germany, have a significant presence there because they see it as a massive present and future opportunity.
The other excuse is that those countries have products or services for which India is a major market. But don’t we have world leading skills in viticulture and wine making in a climate remarkably similar to India’s? We also harvest, transport and store agricultural produce with minimal wastage, whereas India loses half of theirs. Our defence industries and our R&D generally are world class and greater collaboration with India would be mutually beneficial. We could also attract more international students here by promoting distance learning in India more vigorously.
Not only is our business presence in India minimal, it has been highly erratic. Numerous Australian corporates have had a significant presence there, but most have pulled out for a variety of reasons, demonstrating their lack of commitment.
The promise of the Morrison-Modi Summit owes a lot to a report by Australia’s former Foreign Secretary and High Commissioner to India, Peter Varghese AO, on the Indian opportunity. The introduction to his report, An India Economic Strategy to 2035: Navigating from Potential to Delivery captures the potential, and what is required to pursue it, perfectly: “Over the next 20 years, a growing India will need many of Australia’s goods and services – including in education, agriculture, energy, resources, tourism, healthcare, financial services, infrastructure, science and innovation, and sport.
There’s no single major market out to 2035 with more growth opportunities for Australian business than India. Australia’s ties with India are long-standing and strong. What’s now needed is a step change in the economic partnership, led at the highest levels of government and business.
The India Economic Strategy is an ambitious plan to transform Australia’s economic partnership with India out to 2035. Getting the Strategy right will strengthen the resilience of the Australian economy and help realise India’s aspirations.”
At the Summit, our Government demonstrated its commitment to the Varghese recommendations, proposing several strategic initiatives, including finally signing a Comprehensive Strategic Partnership, which has been many years in the making; the sale of our barley; requests to be permitted to establish Australian educational institutions in India; closer collaboration in cyber-security, infrastructure and defence industries.
It’s a very promising beginning, hopefully a new dawn that will finally see the Australia-India business relationship move towards its full potential! The only fly in the ointment was that our PM couldn’t resist the temptation to refer to his taste for Indian food and joke that he had cooked samosas, which he would have liked to have given to the Indian PM had they met in person and how much he wanted to taste Gujarati Khichdi! Modi, the consummate negotiator, of course responded jocularly and the Indian diplomats duly laughed. But, deep down, they feel our PM’s continuous reference to his curries, even frequently saying that curry is the best metaphor for the bilateral links, trivialises the relationship. The term Khichdi in common parlance means mishmash! They even derisively call Morrison Scomosa!
Successful partnerships must deliver mutual benefit founded on mutual respect. Fortunately, the Australian cabinet ministers and diplomats at the Summit, Simon Birmingham, Marise Payne, Dan Tehan and Barry O’Farrell among them treated the event very seriously and conducted themselves impeccably. We can only hope that their efforts meet the success they deserve!