Business activity between India and Australia is becoming more important and relevant for both countries. India was Australia’s eighth-largest trading partner and fifth-largest export market in 2018-19. This was mainly driven by coal and international education.
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Two-way goods and services trade with India was US$30.3 billion in 2018-19. The level of two-way investment was US$30.7 billion in 2018. Australia has an ambitious agenda to broaden trade and economic relationship, as stated in the India Economic Strategy (IES), which was published in July 2018 and endorsed by the Australian Government in November 2018.
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What is the nature of India-Australia business activity?
India’s young demographic, rising demand driven by digitization, and aspirational market have made it an attractive market for businesses across the globe.
Australia acknowledges that it should recognize and respond to India’s priorities of creating ‘New India’, by engaging itself in a dependable bilateral partnership. ‘New India’ is a pledge by premier Narendra Modi for building a New India in terms of a clean, poverty-free, corruption-free, terrorism-free, communalism-free, casteism-free India. Australia has a high reliance on trade with China, and it is therefore important for the country to diversify its market and strengthen relations with other trade partners like India. In comparison with Australia-India trade values, two-way trade between Australia and China is more than US$200 billion.
To address the gaps and possibilities that exist in the Australia-India relationship, Australia launched its India Economic Strategy 2035 (IES 2035) in 2018. This strategy sets the goal for India to become one of Australia’s top three export markets by 2035. This shift would make India the third-largest destination in Asia for Australian outward investment, and bring India to the inner circle of Australia’s strategic partnerships.
The IES 2035 is split into 10 industry sectors identified as areas where Australian businesses should have a measure of competitive advantage. The Australia Economic Strategy (AES), which is the mutual report from the Indian government, will be released later this year. This type of blueprint to enhance trade opportunities between India and another country has never been attempted before.
Australia India Business Exchange (AIB-X)
The Australia India Business Exchange was a clear attempt at turning the objectives and goals stated in the IES 2035 into tangible actions and results.
The AIB-X was launched in October 2019, by Austrade (Australian Government’s trade, investment, and education promotion agency) including a series of meetings, events, commercial conferences, trade shows, culminating with this large business delegation visiting India. The focus of AIB-X was on four major sectors: education, agribusiness, resources, and tourism. The exchange also focused on initiatives in food beverages, energy, health, financial services, infrastructure, sport, and science and innovation. The delegations from both countries are committed to mutual cooperation in the specific areas.
MoU on mining
Within the natural resources sector, the Australasian Institute of Mining and Metallurgy (AusIMM) signed a three-year Memorandum of Understanding (MoU) with the Indian Institute of Technology-Indian School of Mines. This in order to connect Australasia and India’s communities of resources experts.
India has a shortage of skilled mining professionals. The output per mining worker varies between 150 to 2.650 tonnes per annum, compared to an average of 12.000 tonnes per worker in Australia. Mining contributes approximately 8% of Australia’s GDP, however, India’s mining industry only contributes 1.4% to its GDP.
A lack of investment in exploration (only 2% compared to Australia’s 13%) has led to only 10% of mineral exploration in India. An additional factor leading to this lack of mineral exploration is inadequate information about proven reserves. Geophysical and geochemical data has only 2-4% coverage, compared to 90-100% coverage in Australia.
Australian food and wine products
The enthusiasm for Australian food and wine products in the Indian market continues to grow, especially with the rise of e-commerce. The presence of key Australian wine producers like Taylor’s wines in the AIB-X delegation demonstrated a growing interest of Australian winemakers to explore the Indian market, which is witnessing a rapidly changing demography with increasing urbanization.
There are more than 40 Australian wine companies with a presence in India, including established brands like Jacob’s Creek, De Bortoli, McWilliam’s, Penfold, Lindemans, Westend Estate, and Wines by Geoff Hardy. 75% of the wine exported to India is from Australia, France, Spain, and Italy collectively.
The partnership between e-commerce platform Amazon India and Australia to sell Vegemite, and several other Australian products, will give Australian firms easier access to 450 million internet users in India. Vegemite are health and beauty products from multivitamin brand Swisse.
Over the last 10 years, the volume of imported food has more than tripled in India from US$1.7 billion in 2009 to US$5.3 billion in 2018.
The fastest-growing tourism sector
India has become Australia’s fastest-growing tourist market with visitor numbers increasing tremendously. More direct air services facilitate the development of this market. With a 700,000-person Indian diaspora currently, Indian-born Australians are expected to outnumber Chinese-born Australians by 2031, reaching 1.4 million people.
Australian Trade Minister Simon Birmingham announced a funding boost of AU$1 million (approximately US$660,100) in the tourism sector. Additional to the AU$5 million (approximately US$3,298,350) announced last year. To further ramp up its marketing efforts in a bid to attract more Indian tourists in the upcoming Cricket, ICC T20 Men’s World Cup.
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