India Offers the Best Economic Potential for Australia
Source : Business Standard
India offers the best economic growth potential for Australia and not China over the next 20 years, a report supported by the Australian government has pointed out.
‘An India Economic Strategy to 2035’, penned by former Australian High Commissioner to India Peter N Varghese, bats for more economic linkages between the nations at a time Indian businesses have been scouting for newer overseas markets, egged on by the government.
“If you look globally at where the best prospects for growth in trade and investment relations are, India stands out as the single most significant growth opportunity for Australia. Our trade with Beijing is many multiples of our trade with New Delhi so I’m not expecting India to overtake China. The vision in the report is to bring India up to the third position among Australia’s trade partners,” Verghese, who had earlier also been the Foreign Affairs and Trade Secretary, told Business Standard.
The 500-page report has been submitted to Australian Prime Minister Malcolm Turnbull’s office and his government will be bringing out its official recommendations on the report by the end of the year, Verghese added.
Official statistics show that India’s exports to Australia stood at $4 billion in 2017-18, while imports were pegged at nearly $14 billion. While higher crude oil prices have led to greater realisations from processed petroleum shipments ($1.35 billion), most other categories of exports to Australia have stagnated.
On the other hand, the yawning trade deficit has principally been due to Australian coal and natural gas exports worth over $9 billion. India also continues to prominently figure among major markets receiving farm produce from ‘down under’. The country sent over $924 million worth of chickpeas and pulses and $125.63 million worth of wheat in the last financial year. These imports have witnessed a steady rise over four years and agri majors such as GrainCorp and Olam Australia are looking to scale up business in India and nearby markets, according to a senior official from the Australian High Commission.
Agribusiness, along with the associated sectors of logistics and food processing, is among the major sectors that can see economic ties jump, Verghese said. Australian companies in the resources space — coal, natural gas and pulses — still view India as a preferred destination for exports, he added. His report also points to educational services, provided by Australian universities as another rising sector, at a time when the number of Indian students to Australia has continued to grow. India and Australia are currently negotiating a free trade agreement (FTA) apart from being members of the proposed Regional Comprehensive Economic Partnership (RCEP). While liberalisation of trade and services regime, removal of non-tariff barriers and encouraging investments have been the broad aims of both engagements, talks have faltered on tariff reduction and market access.
The 16-nation RCEP agreement involves the ten countries of the Asean (Association of Southeast Asian Nations) grouping and six of its free trade partners — China, India, Japan, New Zealand, South Korea and Australia. Under the RCEP, India had earlier offered tariff elimination of 42.5 per cent of all traded goods to Australia, while that country has offered zero tariff on 80 per cent of such goods.
On the other hand, discussions on market access for Australian dairy products and meat have proved to be major sticking points in the proposed bilateral Comprehensive Economic Cooperation Agreement (CECA), talks on which had begun in 2011.
More than 13 rounds of negotiations have been completed so far. “There is a lot that can be done even in the absence of an FTA. The barriers to free trade in the future are going to be less about tariffs and more about behind the border, regular trade barriers,” Verghese added.
He suggested that Canberra may be looking to conclude RCEP talks first and test the waters before starting up talks on the FTA with India, that have now slowed down.
Earlier this year, a two-day visit by Commerce and Industry Minister Suresh Prabhu saw India promising to commission a strategy paper focusing on Australia.