Stronger business and trade ties will shape Aus-India strategic partnership

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, Government of Australia Dan Tehan MP met in New Delhi to discuss ways to speedup negotiations towards formalizing India-Australia Comprehensive Economic Cooperation Agreement (CECA).

Some of the sticky points include resolving tax-related issues concerning the Indian software firms in Australia, and boosting the two-way trade between the two countries. The immediate outcome of the meeting was a shared commitment to conclude the full CECA agreement by end- 2022 and an interim agreement by December 2021 to boost and liberalise trade in goods and services. In the meeting both Ministers recognized that having a balanced trade was key to expanding trade and investment flows for both economies, and strengthening a rules-based international trading system.

At the strategic level, India and Australia remain committed to building and strengthening a rules-based, transparent, non-discriminatory, open, and inclusive multilateral trading system furthered by the World Trade Organization.

Currently, Australia and India bilateral trade rests at AUD$30 billion which is way below their potential, and in order to make India one of the top three trading partners (currently 7th) of Australia by 2035, CECA is vital. Australia imports petroleum products, medicines, polished diamonds, gold jewellery, apparels among other items from India, and India imports coal, LNG, alumina and nonmonetary gold from Australia. In the services sector, India exports travel, telecom and computer, government and financial services, and relies on education and personal related travel from Australia.

It is important to highlight that much of the intensity in their bilateral engagements in recent months has been driven by Australia’s growing tensions with China over the treatment of Uighur Muslims in Xinjiang, Hong Kong crackdown, alleged foreign interference in Australia’s internal political functioning, tariff wars and impact of Covid-19 pandemic on the one hand, and India’s military tensions with China in Doklam and Ladakh, on the other hand.

India’s External Affairs Minister Dr Subrahmanyam Jaishankar in an interview with a policy think-tank in Australia said that he takes great satisfaction in how the Australia-India bilateral relationship has deepened in the last year and a half. As two cricket playing Commonwealth members, both share interests and values and their ties should be independent of their respective relationship with China, he said.

It will not be an exaggeration to submit that the Australia- India ties that elevated to Comprehensive Strategic Partnership in June 2020 have reached a historical high and are poised to transform into a significant relationship in the Indo-Pacific. Be it Australia choosing to divert agricultural exports to India from China or the deepening maritime cooperation and the evolution of Quad, both sides have demonstrated a firm resolve to shape the post- Covid order. Australian Senator Simon Birmingham, who led a trade delegation to New Delhi in February, had said, “Australia must look into alternative markets in the European Union and India.” The Department of Foreign Affairs and Trade itself has observed that India’s youthful population and diversified growth trajectory present significant opportunities in education, agriculture, energy, resource, tourism, healthcare, financial services and infrastructure among other areas. Both sides have formalised over 20 MoU last June covering some of these areas during the Modi-Morrison virtual summit. Their two-way trade has risen from $13.6 billion to $30.4 billion in 2018, but it is still below their full potential. By 2035, both sides aim to double their bilateral trade and Australia seeks to bring India in its top five trading partners (currently 7th).