Nicholas Carney. Advancing the Australia-India relationship under Prime Minister Modi

Jun 12, 2014

Narendra Modi’s ascension to the prime ministership of India has sparked interest around the globe, including here in Australia.

The world is right to pay attention to Mr Modi’s rise. In the recent Lok Sahba (‘House of the People’) election, the Bharatiya Janata Party (BJP) that he leads took 282 of the 543 seats in the Lok Sahba. The result gives the BJP a majority for the first time in its history, and India its first majority government since the 1984 election. The new government’s majority rises to a commanding 336 seats if those won by the BJP’s coalition partners in the National Democratic Alliance are included.

Mr Modi and the BJP were expected to perform well in the election – after all, Indian economic growth languishes between 4-5%, inflation is stuck around 9%, corruption is rife, and the former United Progressive Alliance (UPA) government appeared impotent to respond – but nobody expected a victory of this magnitude.

The electorate has given Mr Modi a resounding mandate to pursue his promised program of growth, governance and infrastructure, and savaged the once-dominant Congress Party that led the UPA. The Congress Party, which has long been controlled by the Gandhi dynasty, recorded easily its worst result, as its seats fell from 206 in 2009 to just 44.

It should surprise no one that Prime Minister Tony Abbott was quick to call and congratulate the new Indian leader on his victory. India represents a golden economic opportunity for Australia: it is enormous (with approximately 1.2 billion people), young (with a median age of 27), and on course to become the world’s most populous country by 2025 (leapfrogging China).

The India that Mr Modi has pledged to deliver – a resurgent India, growing again at 8%, building and benefiting from new and long-overdue infrastructure, investing in its relatively young population – will have an insatiable appetite for resources, commodities, education and agriculture from Australia, just as China has over the last decade. Mining services, infrastructure and project management, and healthcare present extraordinary opportunities as well if we can seize them.

India is also a key actor and potential strategic partner for Australia in our increasingly contested neighbourhood. Both countries have a clear interest in the stability and security of the Indian Ocean but our mutual interests extend further in the Indo-pacific region.

The new Indian PM may be singularly focused on growth at home but he has made clear that isolationism is not an option if this goal is to be achieved. India will continue to pursue its ‘Look East’ foreign policy under Mr Modi but the emphasis will be on investment and trade opportunities.

If Mr Modi’s approach as Chief Minister of Gujarat is anything to go by we should expect an assertive style of ‘economic diplomacy’ focusing on China, Japan, Singapore and other South East Asian nations, where the Indian government is not shy to promote its companies. Mr Modi courted these countries in his former role in Gujarat and developed good relations with leaders, especially with Japan’s Prime Minister Shinzo Abe.

India has long been seen as a logical counterweight to China, a country that, in recent months, has adopted a more aggressive approach towards territorial disputes with its neighbours. However, Mr Modi will however be loathe to antagonise China because of its importance to his growth mission. How effectively he manages this relationship could have grave implications for the region and Australia.

For Australia, a confident, regionally-engaged India is in our interest, particularly at a time when the US commitment to military engagement has diminished.

With so much on Mr Modi’s plate and so many other countries queuing up for his attention – President Obama was also quick to call after the election – what, if anything, can Mr Abbott do to advance the Australian relationship in the halls of Delhi and Mumbai?

A meeting with the new Indian PM is essential. Fortunately for Mr Abbott and Australia, Mr Modi is almost certain to attend the G20 Leaders Summit in Brisbane in November. This will be the first time an Indian PM has visited Australia since Rajiv Gandhi in 1986. Mr Abbott must make the most of this serendipitous opportunity by locking in a bilateral meeting during the visit.

The agenda for the meeting will be critical. The following topics must be discussed: finalisation of the uranium export agreement; a roadmap to resolve any outstanding issues in the Australia-India Comprehensive Economic Cooperation Agreement negotiations; cooperation in the Indian Ocean; as well as specific Australian trade and investment proposals that will support Indian growth – for example, how Australian education providers can assist India to meet its goal to deliver vocational education to 500 million citizens by 2022 when its current capacity is only 5 million, or how our mining sector can help India to access more efficiently its substantial iron ore deposits.

Their meeting must not be a one-off. Prime Minister Abbott should follow former NSW Premier Barry O’Farrell’s example and lead annual or biennial trade delegations to India. These delegations create people-to-people links and put Australia front of mind for Indian businesses and diplomats.

Another way the Australian Government can promote these links is by including India in the new Colombo Plan, which funds student exchange and internships in Asia, and funding the Australia India Strategic Research Fund (funding was not renewed in the recent budget).

Having Australian students and researchers studying in India, or undertaking joint projects with Indian colleagues, will form life long friendships and academic and business partnerships which will serve Australia well in trade and security matters.

India’s young population means connections with Indian youth are especially important. The Government should foster these connections by supporting organisation like the Australia India Youth Dialogue, which brings together passionate and energetic young people from both countries to consider issues central to bilateral relations.

Prime Minister Abbott can also wield soft power by embracing the Indian diaspora in Australia. According to the 2011 census, there were 295,000 Indian migrants in Australia and 390,000 people who claimed Indian ancestry. At its best, the Indian diaspora can be a cheer-squad for Australia in Delhi and Mumbai, with better access to government and business than our diplomats can hope for.

Given Mr Modi will have his hands full trying to lift Indian growth, improve governance and kick-start infrastructure projects, Australia must be proactive in promoting this important relationship. Mr Modi’s second visit to Australia later this year is an opportunity that cannot be wasted.

Nicholas Carney is a Senior Associate at Herbert Smith Freehills and he sits on the Council of the University of New South Wales. In 2014, he was a participant in the Australia India Youth Dialogue. The views set out in this article are his own.  

Share and Enjoy !

Subscribe to John Menadue's Newsletter
Subscribe to John Menadue's Newsletter


Thank you for subscribing!