INDIA NEWS
Jan 1-15, 2021 - Vol 1, Issue 13
Anil Wadhwa-led Australia Strategy initiates Jugalbandi with Peter Varghese’s India Strategy
The much-awaited India’s Australia Strategy led by former Indian diplomat and Secretary (East) Anil Wadhwa is released. Commissioned by the Confederation of Indian Industries, in conjunction with KPMG and the Ministry of External Affairs, the Australia strategy was launched on December 18 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 is expected to complement the Peter Varghese led “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. Compartmentalised 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 new strategy will deepen collaborations in space, defence and education and emphasises on the diversification of supply 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. Minister Goyal noted that “India can provide a core pathway for linking supply chains and provide trusted and reliable suppliers to the world”. It should not be lost to the readers that both reports have been led by two remarkable diplomats who have shaped diplomatic, trade
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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 auger 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 report a buoyant Simon Birmingham, former Australian Minister for Trade, Tourism and Investment 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, before the lock down, and as tensions grew with China he said, “Australia must look into alternative markets in the European Union and India.” The report assumes greater salience as Australian looks to diversify businesses from China. The historic virtual summit on 4 June between the Prime Minister Scott Morrison and Prime Minister Narendra Modi proved a shot in the arm for the Strategic Partnership, now upgraded as “comprehensive”. 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 5 trading partners (currently 8th). Ambassador Anil Wadhwa has very aptly provided the context for the report saying, “Changed geo-political relations offer some great opportunities for both countries.” But there should be no doubt that the two reports provide only the board road map and since bulk of the recommendations in both reports are based upon the preCOVID-19 geopolitical and global settings, some recalibration and adjustments will be required on both front across several sectors. There is much to be achieved in terms of ironing out differences over Comprehensive Economic Cooperation Agreement, but the finalisation of the two strategies is a potent symbol of prevailing mutual understanding for taking bilateral ties into a higher orbit. Rapidly altering geopolitical realities are only making it more urgent.
EDITORIAL
India’s Australia Economic Strategy report: Heralding historic opportunities By Ambassador (retd) Anil Wadhwa* I am personally delighted that the Australia Economic Strategy report, which I have been working on along with the CII and KPMG teams over the past two years, was released on 18 November 2020 in the presence of the Ministers Piyush Goyal, and Simon Birmingham and several stakeholders in the bilateral relationship. It complements the Australia India Economic Strategy led by Peter Varghese in 2018. The Australia strategy is informed by 100s of think tanks, states, government ministries, businesses and universities in India and Australia. It has identified 12 key sectors namely mining, services and startups, pharmaceuticals, health care and medical technologies, education and skills, agribusiness, infrastructure, power and renewable energy, railways, gems and jewelry, automotive spare parts, and tourism, witnessing collaboration already. It crystal gazes for opportunities in emerging areas like labor intensive services, defense, sports, textiles and textile designing, digital gaming and animation, water management and commercial ferries/ shipbuilding, space and education technologies – all of which are expected to gain increased relevance. The altered regional and global geopolitics presents excellent prospects for enhancement of bilateral economic ties in some critical areas. Disruptions in global and regional value chains are a potent reminder to rely on trustworthy partners believing in the Rule of Law. Ministers Piyush Goyal and Simon Birmingham announced a Resilient Supply Chains initiative with Japan on 1 September. In this context, in India, the pandemic has underpinned a number of reforms, and incentives have been announced for boosting manufacturing. These will attract further investments from Australia and bolster trade. The Australia–India agreement on cooperation on critical minerals and rare earths is especially relevant, as these two countries have complementarity of interests; while Australia is keen to find alternative export markets for its minerals, India needs rare earths for its advanced manufacturing sector and for its e–mobility programme. The new mining policy in India will renew the scope for diversification and expansion of the existing resources partnership through mining and processing of critical and strategic minerals. 400 million Indian youth need training by 2022 and Australian VET sector has a huge opportunity in training curriculum, aligning Indian accreditation and assessment to global standards, and improving trainer quality. Opportunities for sustainable solutions for water and water recycling across India and in immunology, vaccine development, circular economy,
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surface coal gasification, and waste-to-wealth processes have emerged for Australian companies. Australia is ideally placed to partner in grains management, rationalization of costs and logistics driven by the ongoing bilateral agribased programmes. Australian Super funds and infrastructure companies can enter the highways and toll roads sector. The defense and space related companies as well as shipyards in Australia and India are buoyant at new opportunities. Australia has announced massive investments in its cyber security wherein India can complement with tech pool as per Australian requirements. The Indo-Australian scientific collaborations in research & development, manufacturing equipment and identifying treatments to face global health emergencies is expanding. Australian investments and technology have been identified for collaborations in food technology and processing in the dairy sector. 100% FDI has now been permitted in India for renewable energy projects, which can be availed by Australian companies. India needs to pumped storage projects to manage large scale integration of RE and grid balancing which will be of deep interest to Australia. Australian investments in India’s heritage and religious tourism, eco and coastal tourism and hospitality can secure huge returns once global travel normalizes. Both can also collaborate to integrate e-learning solutions into existing curriculums and in enabling teachers to develop online curricula. Australian businesses will benefit immensely from opportunities and market in India for scaling up technologies in med tech, health tech, Edu tech and EdTech. Australian and Indian companies should collaborate in digital gaming and animation, textile designing, sports technologies and equipment, auto components, renewable energy and power, healthcare, and clinical trials. India has reduced corporate tax rate to 25%, and rolled out the production Linked Incentive (PLI) in electronics and Active Pharmaceutical Ingredients (APIs), as well as Phased Manufacturing Plan (PMP). PLI has now been extended to 10 more sectors including battery manufacturing, auto components, network products, textiles, food processing, solar photovoltaic cells etc. Genomics, artificial intelligence, 5G, robotics and drones are all on the radar. Overall, India has identified 24 focus sectors in manufacturing in which Australian companies can collaborate. But the following steps are now necessary. First, under the directions and supervision of the two Ministers of Commerce and Industry and Trade, both sides need to form a special working group comprising officials from foreign and other ministries and organizations to
Ambassador (retd) Anil Wadhwa review implementation of the two reports on a 6-monthly basis. Their task will be to identify trade and investment barriers, facilitate businesses engagements across federal and state levels, and ministries. This will also include looking at issues like easing of visas and other consular issues, taxation, banking, phytosanitary and other regulatory barriers. Second, relevant departments in both countries must be committed and supportive, allocating requisite funds for dissemination of information and contents in the reports. This report contains several pointers and recommendations for action by various ministries in India. Third, India and Australia should seriously look at their Free Trade Agreement negotiations, stalled due to RCEP. There are huge mutual gains from its realization and will also help them align their Resilient Supply Chains initiative with Japan. Fourth, big businesses on both sides must explore the investment route to drive trade traffic. The business-to-business linkages need strengthening through periodic meetings between trade bodies and associations, and sector specific, specialized business dialogues. The CEOs Forum between the two counties must be revived with the right partnership and specific working groups to operate during the intersessional period with recommendations. Fifth, we recommend that à la Australia India Strategic research fund, both sides should start a joint start up and innovation fund as well as a humanities and social sciences collaboration fund with a modest contribution of US $10 million by each side over 5 years for each of these funds. Sixth, post-pandemic, both should diligently work towards starting direct flights between major commercial and tourist hubs which will help increase trade, investments, and tourism. Finally, India must strengthen manpower in the Indian Embassy and Consulates, explore opening new Consulates in Adelaide and Brisbane, strengthen CII’s presence, and revive Indian tourism offices in Australia to lend institutional push to the implementation and follow up on the report’s recommendations. *Ambassador Anil Wadhwa has served as Secretary (East) in the Indian Ministry of External Affairs and as Ambassador to Italy, Thailand, Oman and Poland. He is the Chairman of India’s Australia Economic Strategy Report task force.
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