INDIA NEWS
Nov 1-15, 2021 - Vol 2, Issue 9
SPECIAL FEATURE
Chasing CECA: Australia and India now mean business By Dr Ashutosh Misra
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ejuvenated by the former Prime Minister Tony Abbott’s visit to India as Australia’s special envoy, bilateral negotiations to ink the Comprehensive Economic Cooperation Agreement (CECA) have gained considerable momentum. Thanks to in-depth discussions that transpired between India’s Minister of Commerce and Industry, Consumer Affairs and Food, and Public Distribution and Textiles Piyush Goyal and Australia’s Minister for Trade, Tourism and Investment Dan Tehan MP in New Delhi in early October. The debate over whether or not the Peter Varghese report required a new policy-approach in the context of rapidly altered bilateral, strategic and international circumstances has been answered by discussions between the two ministers. While much of the recommendations of the Peter Varghese report still hold ground, there certainly is a need to recalibrate our bilateral business and trade strategies and diplomatic engagements. The much-awaited India’s Australia Strategy led by former Indian Secretary (East) Anil Wadhwa has come at the right time and covers much of the period since the covid outbreak. In that sense it addresses opportunities and challenges, not covered in the Varghese report. Commissioned by the Confederation of Indian Industries, in conjunction with KPMG and the Ministry of External Affairs, Anil Wadhwa’s Australia strategy was launched on 18 December 2020 in New Delhi. Speaking at the launch of the strategy report entitled, “Enhancing India Australia Bilateral Economic and Trade Relationship”, Piyush Goyal, Minister of Commerce & Industry and Railways, Consumer Affairs, Food and Public Distribution said, “India’s opening up of engagement and activities with Australia is a great morale booster for the entire world, especially during the current crisis,” The report complements the Peter Varghese led report, “An India Economic Strategy to 2035: Navigating from potential to Delivery” launched in November 2018. The Wadhwa report comes at a critical time when both sides have been grappling with tensions with China and desperately looking for alternative ways for not only bolstering business and trade ties but also ensuring a safer Indo-Pacific. Divided into seven broad chapters the report is expected to boost India’s business and trade engagements in gems and jewellery, pharmaceuticals, auto and spare parts, healthcare, agribusiness, apart from the mining and resources sector. It is also expected that the Wadhwa report will deepen collaborations in space, defence and education and emphasise on the diversification of supply
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chains for managing the current transitions in global value chains. What is interesting is that the report recommends integrating Micro Small and Medium Enterprises of other countries into the global value chain to insulate global trade from disruptions as witnessed in the wake of Covid-19 outbreak. Earlier, Minister Goyal noted that “India can provide a core pathway for linking supply chains and provide trusted and reliable suppliers to the world”. It is important to underline here that both reports have been authored by two remarkable diplomats who have shaped diplomatic, trade and business engagements during their illustrious careers and are also masters of global politics. They understand the pulse of global trade and diplomacy and have an acute sense of timing and delivery. Their rich experiences have informed the two incisive strategies which augur well for companies, traders, agriculturists, entrepreneurs, educationists among others in opening up new vistas of trade, supplies, research and development and investments opportunities. At the launch of the Anil Wadhwa report, a buoyant Simon Birmingham, former Australian Minister for Trade, Tourism and Investment had observed that the new strategy will bolster exchanges in technology and cybersecurity, Artificial Intelligence, quantum computing and robotics and waste management and thereby catapult the “comprehensive strategic partnership into an upward bilateral and trade trajectory with India”. He had led a trade delegation to New Delhi in February 2021 and said, “Australia must look into alternative markets in the European Union and India. Why India matters So why so much interest in India? It is deeply encouraging for Australia and other major economies that India has been elevated to 63rd in ‘doing business with ease’ rankings in the World Bank’s Doing Business 2020 Report, making it the sixth fastest growing economy, surpassing France. It is now the 9th largest recipient of Foreign Direct Investment destination in 2019 by the World Investment Report 2020 of the United Nations Conference on Trade and Development (UNCTAD). The total FDI into India showed a 18% jump from US$ 62 billion in 2018-19 to US$ 73.45 billion in 2019- 20, in the steel, digital and energy sectors. The report lists professional services and digital economy as some of the most sought-after industries in India for venture capital firms and technological companies. Since 2000, the highest cumulative investments have been recorded in the services sector, computer software and hardware, telecommunications, trading
and construction development. As per the Global Innovation Index (GII) published by the World Intellectual Property Organization (WIPO), India ranks 52nd in innovation, improving from 57th in 2018, and topping the list amongst the Central and South Asian nations. India also ranks 77th in the input pillar “Institutions” that measures political, regulatory and business environments; and 53rd in the input pillar “Human Capital and Research” which is based on education level, tertiary education and research and development. India ranks 7th in the “Number of Graduates in Science and Engineering” and 35th in “Research and Development”. When it comes to infrastructure measures which includes the performance of Information and Communication Technologies (ICT), general infrastructure and ecological sustainability India ranks 17th. With regard to market sophistication India ranks 20th both, in terms of “Ease of Getting Credit” and “Market Capitalization”; 3rd in “Domestic Market Sale” and 6th in “Ease of Protecting Minority Investors”. In business sophistication, India has jumped from 51st in 2018 to 27th rank, and 23rd in “University/ Industry Research Collaboration”, something that should interest the academic stakeholders in Australia. India is a major success in Knowledge and Technology and ranks 1st in ICT services exports (as a percentage of total exports) and also ranks 22nd in the list of “Exporter of Creative Goods”. Next Steps in Business and Trade Engagements It is imperative that Australia and India put together the following time-bound action plan at the bilateral front: 1. In the first year dialogues must be undertaken at the ministerial level in different sectors. 2. In a maximum of six months, existing Working Groups need to be galvanised and new ones formed to take action upon the recommendations of the two reports. Sub-working group must be formed and tasked to dish-out
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the details of the consultations and recommendations. 3. All ministerial departments must act in unison and diligently until business relationship gains a momentum of its own. 4. Yearly review of these dialogues and consultations must be undertaken to identify progress, bottlenecks and future action-plan and ideally be shared with the apex leadership on both sides to enable an informed and productive discussion in summit meetings. 5. Sector specific dialogues and consultation must be held under the Free Trade Agreement talks to address the issues of Rules of Origin and trade barriers urgently. 6. Trade talks will be complex and challenging, and businesses on both sides need to become thick-skinned while structural impediments and bureaucratic delays are ironed out. There is also a need to spread risk and diversification in Australia’s business and trade ties by engaging with India. 7. Focusing on impact sectors — sports and education will help create a conducive and positive atmosphere on both sides and shape positive public opinion. Herein, bringing back 18,000 stranded Indian students to Australia, addressing the gaps and recommendations in India’s New Education Policy 2020, and promoting sporting exchanges and collaboration to strengthen India’s $400 million sports ecosystem must be considered seriously. 8. More efforts are required to bolster India literacy amongst business and trade organisations in Australia, and vice versa. 9. Humanities and social sciences-based cooperation must not be overlooked. Homework for Australia There are a range of strategies which Australia must incorporate in its policy-making on the domestic front: 1. There is a need to open up, if not change, the mindset of the stakeholders in Australia for doing business with India. 2. Sharing success stories and India’s changed economic scenario with business is
necessary to convince them why it is no more business as usual in India. Also, India’s business credentials have become stronger which needs to be shared with Australian stakeholders. 3. Collaboration and consultations must move beyond the track-I level with non-government stakeholders inter alia, academic institutions, small businesses, community associations and policy institutes to gather wider and diverse inputs and suggestions and incorporate them in profiling India’s improved credentials on the one hand, and enriching Australia’s India strategy. 4. As FTA negotiations gather steam, there is a strong case for organising a high-level business conclave, something like the Raisina Dialogue, involving business leaders, entrepreneurs, policymakers, legislators and diplomats to augment Australia’s awareness about India. IAIE is deeply interested in implementing this proposal in conjunction with DFAT, Australia India Business Council, Austrade, Australia India Council, and networks in India in the government, academia, business and strategic circles. The momentum must not be allowed to fizzle away as the constellation of bilateral, regional and global opportunities has never been so encouraging before. This needs both sides building upon them innovatively, diversely and sustainably. Author is the CEO of the Institute for Australia India Engagement, National Sports Chair of the Australia India Business Council and Editor-in-Chief of India News
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