Skip to main content

Australia and India to step up ties

November 25, 2018 | Expert Insights

President Ram Nath Kovind, the first Indian head of state to visit Australia, held talks with Prime minister Scott Morrison to step-up bilateral strategic ties. The visit comes four months after the release of a report, (India Economic Survey) IES, by Australia’s top former diplomat, Peter Verghese AO.

Background

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. India’s first High Commissioner to Australia arrived in Canberra in 1945. In March 1944, Lieutenant-General Iven Mackay was appointed as Australia`s first High Commissioner to India.

The first Indian Prime Minister to visit Australia was Rajiv Gandhi in 1986. In 2014, Prime Minister Narendra Modi’s visited Australia.

In terms of trade, India is the tenth biggest trade partner for Australia and the relationship is more skewed in favour of Australia. Indian companies invest more in Australia. The trade between the two accounted for $19 billion in 2015–16 while China accounted for $150 billion in trade with Australia. Merchandise trade with Australia has declined by 50 per cent in value since 2010.

Analysis

President Ram Nath Kovind defied conventions and has scripted history by becoming the first Indian President to visit Australia. The visit, India hopes, would help the country deepen ties with Australia. Traditionally, Indian presidents have not visited Australia as the Queen is the head of that country.

The Government of Australia has begun to implement important recommendations of a vision document, called “Indian Economic Survey” (IES) which was authored by former Australian envoy Peter Varghese. Indian Economic Survey provides a roadmap which will be used to shape bilateral ties with India till 2035.  “Ministers across education, agribusiness, resources and tourism will oversee progress of the Government’s response and ongoing implementation of the India Economic Strategy,” said Prime Minister Morrison.

The report has provided proposals in four sectors – education, agribusiness, resources and tourism which will get the prominence in the next twelve months. Key actions for the first 12 months include – memorandum of understanding between Australia – India Food partnership and Australia – India strategic research fund which is designed to help researches solve challenges shared by both nations, including energy storage, marine science and plant genomics, expansion of the Australia-India Mining Partnership at the Indian School of Mines, and an engagement with airlines to increase direct flights through the Australia-India air services agreement.

The distribution of $500,000 worth of grants by the Australia-India research fund is also among the initial steps the government has committed to. India’s and Australia’s merchandise trade stood at AU$ 20,856 million for 2017. The biggest component of merchandise trade during the year has been coal – worth AU$ 9,181 million.

Mr Kovind urged Australian businesspeople to use cricket as a metaphor for business. "The most successful Australian batsmen in India have been those who have shown patience, read the conditions carefully, settled down for a long innings, nurtured their partnerships and not fallen for spin," he told Mr Morrison and business leaders in Sydney. "Please come to India, the pitch is ready."

On the side lines of the visit by President Kovind, Australia and India on Thursday concluded five agreements, including one between the Central Mine Planning and Design Institute based in Ranchi, and the Commonwealth Scientific and Research Organisation, Canberra. An agreement between the Acharya N.G. Ranga Agricultural University, Guntur, and the University of Western Australia, Perth, for cooperation in agricultural research and education was also signed. “Today’s steps are only the first on a long journey that will see Australia and India grow together,” Prime Minister Morrison said.

Counterpoint

Australia has recently referred Delhi to the World Trade Organisation over its sugar subsidies. India has also been criticised for reportedly slowing down recent negotiations over a multilateral trade agreement - the Regional Comprehensive Economic Partnership - involving 16 Asia-Pacific countries.

India had also refused Australia's bid to participate in the 2018 Malabar naval exercises, which also include the US and Japan. Meanwhile, the Quadrilateral Security Dialogue involving all four countries, which was revived last year, has got off to a slow start.

Assessment

Our assessment is that the Australians were hesitant to invest in India because of corruption and red-tapism. India has to increase its strategic cooperation with the US and its allies in the region, such as Japan and Australia because of the emergence of Chinese influence in the Indo Pacific region. We feel that Australia also shares a similar bias towards Chinese predominance and would like to engage in balancing out the influence through economic integration.

We believe that from Australia’s perspective it is also India’s liberal democratic and secular character which provides a foundation for this evolving strategic congruence and anything which materially weakens India’s democratic credentials or its commitment to a secular liberal society might question the basis of this intended partnership.