Australia endorses Indian Economic Strategy

Australia endorses Indian Economic Strategy

India's President Ram Nath Kovind (L) talks to Australia's Prime Minister Scott Morrison at the Australian Financial Review (AFR) India Business Summit in Sydney on Thursday. AFP

The cricket parlance took the centre stage, as the Australian federal government endorsed the Indian Economic Strategy (IES) -2035, compiled by its former High Commissioner to India, Peter Varghese. As per the initial implementation of the IES 2035, four sectors -- education, agribusiness, resources and tourism -- will get the prominence in the next 12 months.

With this, India is now one of Australia's key international trade partners. As part of the plan, key actions for the first 12 months include -- memorandum of understanding between Austrade and Invest India to promote bilateral investment flows, the establishment of an Australia-India Food Partnership, Australia-India Strategic Research Fund grants of up to AU$5,00,000 (approximately Rs 2,57,88,529).

This is designed to help researchers 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.

India’s and Australia’s merchandise trade stood at AU$ 20,856 million (approximately Rs 1.08 lakh crore) for 2017, with Australia being the ninth principal import source of India. The biggest component of merchandise trade during the year has been coal – worth AU$ 9,181 million (approximately Rs 47,400 crore).

On the other hand, Australia is 22nd principal export destination for India, with most of it coming from refined petroleum (AU$ 1,554 million or approximately Rs 8020 crore).

On a first-ever state visit by an Indian President to Australia, Ram Nath Kovind urged Australian companies to invest in India. “Please come to India – the pitch is ready,” Kovind told industry captains at the AFR – India Business Summit – 2018 held here.

Responding to this, Australian Prime Minister Scott Morrison said that his country is ready to meet at the pitch. 

But the picture is not that rosy between both the countries, as recently Australia dragged India to the World Trade Organisation over the export subsidies on sugar.

According to David Rynne, Director – Policy, Economics and trade at Australian Sugar Milling Council, the export subsidies by Indian government have lowered the international prices by AU$ 48 per tonne in 2018-19. This has caused a revenue loss of AU$ 360 million (approximately Rs 2,000 crore) to the Australian sugar industry in the past years, he said.

However, the Australian government is hopeful that, this won’t impact the bilateral relations, that have seen an uptick recently.

“It is possible (to negotiate with the Indian government to resolve the issue). I have numerous conversations with my Indian counterpart Suresh Prabhu about the challenges we are facing in terms of sugar subsidy. They are not agreeing on substance of all the concerns but we would like to try to find ways to resolve some of those issues,” Australian Minister for Trade, Tourism and Investment, Simon Birmingham told DH.

Meanwhile, the Australian government is hopeful that the Regional Comprehensive Economic Partnership (RCEP) will enhance trade between India and Australia, in absence of the free trade agreement.

“RCEP is an amazing opportunity to form a significant India-Pacific trading block bringing in economies and in doing so it is taking a lot of time and focus of trade negotiators. It would be right and proper for us and other RCEP partner to provide best possible outcome. There is no reason why we can’t achieve a trade outcome of equal subsistence and meaning that a bilateral FTA would achieve through the regional process of RCEP,” Birmingham added.

RCEP is a proposed FTA between the 10 member states of the Association of Southeast Asian Nations (Asean) and the six Asia-Pacific states with which Asean has existing free trade agreements (Australia, China, India, Japan, South Korea and New Zealand).

Indian President Kovind, in his speech also said that he is hopeful of the RCEP taking shape by 2019.