Foreign Policy Watch: India-Australia

India, Australia Relations

Note4Students

From UPSC perspective, the following things are important :

Prelims level : NA

Mains level : India-Australia relations

The Union Cabinet has approved the signing of an Audio Visual Co-production Treaty between India and Australia, which is aimed at facilitating joint production of films between the two countries.

India – Australia Relations

  • Both the countries share the ethos and values of pluralism, liberal democracy, steadfast commitment to rule of law, Commonwealth traditions, international peace, development and security.
  • The establishment of diplomatic relations between them dates back to the Pre-independence era. It started with the opening of the Consulate General of India as a Trade Office in Sydney in 1941.
  • Since then the ties have blossomed and currently, they enjoy a multi-faceted cooperation spanning areas of political interactions, economic collaboration, scientific research, strategic convergence, friendly people-to-people ties especially diaspora links and sporting ties of hockey and cricket.

Areas of cooperation

1.Political Dimension

  • Both the countries are members of G-20, ASEAN Regional Forum (ARF), IORA (Indian Ocean Rim Association), Asia Pacific Partnership on Climate and Clean Development, East Asia Summit and the Commonwealth. Australia has been extremely supportive of India’s quest for membership of the APEC (Asia Pacific Economic Cooperation).
  • Australia whole-heartedly welcomed India s joining of the MTCR (Missile Technology Control Regime).

2. Economic Dimension

  • In recent years, the India-Australia economic engagement has magnified significantly. Australia has been very appreciative of economic reforms undertaken by India and its improving ease of doing business rankings because of the reforms was undertaken by the current government. India has welcomed Australia to participate in its Make in India, Smart Cities, AMRUT (Atal Mission for Rejuvenation and Urban Transformation), Clean Ganga Project etc. initiatives.
  • India and Australia are partners in the trilateral Supply Chain Resilience Initiative (SCRI) arrangement along with Japan which seeks to enhance the resilience of supply chains in the Indo-Pacific Region.
  • Recently, India signed a historic trade agreement with Australia, the India-Australia Economic Cooperation and Trade Agreement (Ind- Aus ECTA).
  • It is the first Free Trade Agreement (FTA) that India has signed with a major developed country in over a decade.
    India reaches out to Australia, set to start trade talks again | Business Standard News
    Credit: Business Standard
  • The current government has invited Australia s private sector participation in Indian economy. It says red tape in India has been replaced by red carpet and has welcomed private investors.

3.Trade and Economic

  • The establishment of India-Australia Joint Ministerial Commission (JMC) in 1989 encouraged dialogue at a government and business level on multiple issues of trade and investment.
  • India-Australia CEO Forum is a significant mechanism through which business leaders from both nations engage in mutually fruitful dialogue to enhance bilateral trade and investment relationship. The Forum consists of heads of Indian and Australian business from multiple sectors like energy and resources, agri-business, financial sector, telecommunications, IT, education and pharmaceuticals. The last meeting of the Forum was held in New Delhi on 29th August 2017.
  • The city of Canberra, Australia hosted the seventh India-Australia Economic Policy Dialogue during 16-18 July 2017.
  • India’s main exports to  Australia  are  Refined  Petroleum,  medicaments, while our major imports are Coal, copper ores & concentrates, Gold, and  education related  services.
  • India s major imports from Australia are coal, non-monetary gold, copper, wool, fertilizers, wheat, vegetables and education-related services.
  • India and Australia have been each other’s important trading partners.
    • Australia is the 17th largest trading partner of India and India is Australia’s 9th largest trading partner.
    • India-Australia bilateral trade for both merchandise and services is valued at USD 27.5 billion in 2021.
    • India’s merchandise exports to Australia grew 135% between 2019 and 2021. India’s exports consist primarily of a broad-based basket largely of finished products and were USD 6.9 billion in 2021.
    • India’s merchandise imports from Australia were USD 15.1 billion in 2021, consisting largely of raw materials, minerals and intermediate goods.

4.Civil Nuclear Cooperation Agreement

  • Civil Nuclear Cooperation Agreement between the two countries was signed in September 2014 during the visit of the Australian Prime Minister to India. The agreement came into force from 13 November 2015.
  • The Australian Parliament passed the “Civil Nuclear Transfer to India Bill 2016” on 01 December, 2016 which ensures that Uranium mining companies in Australia may fulfil contracts to supply Australian uranium to India for civil use with confidence that exports would not be hindered by domestic legal action challenging the consistency of the safeguards applied by the IAEA in India and Australia’s international non-proliferation obligations.
  • It also ensures that any future bilateral trade in other nuclear-related material or items for civil use will also be protected.

5.Defence Cooperation

  • The Mutual Logistics Support Agreement has been signed during the summit that should enhance defence cooperation and ease the conduct of large-scale joint military exercises.
  • There is a technical Agreement on  White  Shipping Information  Exchange.
  • Recently Australia and India conducted AUSINDEX,their largest bilateral naval exercise, and there are further developments on the anvil, including Australia’s permanent inclusion in the Malabar exercise with Japan. 
  • In 2018, Indian Air Force participated for the first time in the Exercise Pitch Blackin Australia. The third edition of AUSTRAHIND(Special Forces of Army Exercise) was held in September 2018.
  • A broader maritime cooperation agreement with a focus on Maritime Domain Awareness (MDA) is also in the works and Australia has agreed to post a Liaison Officer at the Indian Navy’s Information Fusion Centre – Indian Ocean Region (IFC-IOR) at Gurugram. 

6.Education 

  • Under the New-Colombo Plan of Australian government, 900 Australian undergraduates have studied and completed internships in India during the period 2015-16

7.Diaspora

  • The Indian community in Australia has the population of nearly half a million (2.1 % of the population), and another over 1,50,000 persons of Indian descent immigrated from other countries (Fiji, Malaysia, Kenya and South Africa).
  • India is one of the top sources of skilled immigrants to Australia.

8.Energy Cooperation

  • Joint Working Group on Energy and Minerals was established in 1999 to expand bilateral relationship in the energy and resources sector. The 8th JWG meeting held in New Delhi in June 2013.
  • As energy is one of the central pillars of economic cooperation, both sides agreed during the visit of our Prime Minister to Australia in November 2014 to cooperate on transfer of clean coal technology and welcomed Australia’s desire to upgrade the Indian School of Mines, Dhanbad.

9. International cooperation

India and 62 other countries have backed a draft resolution led by Australia and the EU to ‘identify the zoonotic source’ of Covid-19 and its ‘route of introduction’ to humans.

  • Australia supports India’s candidature in an expanded UN Security Council.
  • Both  India  and  Australia  are members of the Commonwealth, IORA, ASEAN Regional Forum, Asia Pacific Partnership on Climate  and  Clean  Development,  and  have  participated  in  the  East  Asia  Summits.  
    • Australia   is   an   important   player   in   APEC   and   supports   India’s membership of the organisation. In 2008, Australia became an Observer in SAARC.
  • Both countries have also been cooperating as members of the Five Interested Parties (FIP) in the WTO context.

An India Economic Strategy to 2035

  • In 2018, Australia’s Prime Minister has announced implementation of “An India Economic Strategy to 2035”, a vision document that will shape India-Australia bilateral ties.
  • It is based on three-pillar strategy- Economic ties, Geostrategic Engagement and Rethinking Culture-thrust on soft power diplomacy.
  • The focus of this report is on building a sustainable long-term India economic strategy.
  • The report identifies 10 sectors and 10 states in an evolving Indian market where Australia has competitive advantages, and where it should focus its efforts. These are divided into a flagship sector (education), three lead sectors (agribusiness, resources, and tourism) and six promising sectors (energy, health, financial services, infrastructure, sport, science and innovation).

Significance of the Relations

  • Australia is one of the few countries that has managed to combat COVID-19 so far through “controlled adaptation” by which the coronavirus has been suppressed to very low levels. Two of the leaders of this great Australia-wide effort are Indian-born scientists.
  • From farming practices through food processing, supply and distribution to consumers, the Australian agribusiness sector has the research and development (R&D) capacity, experience and technical knowledge to help India’s food industry improve supply chain productivity and sustainability and meet the challenges of shifting consumption patterns.
  • Australia is the 13th largest economy in the world, following closely behind Russia which stands at $1.6 trillion.
    • Australia is rich in natural resources that India’s growing economy needs.
    • It also has huge reservoirs of strength in higher education, scientific and technological research.
    • The dominance of Indo-Pacific countries in India’s trade profile: Fostering deeper integration between India and Australia will provide the necessary impetus to the immense growth potential of the trade blocs in this region.
  • The two countries also have increasingly common military platforms as India’s defence purchases from the U.S. continue to grow.
    • Australia has deep economic, political and security connections with the ASEAN and a strategic partnership with one of the leading non-aligned nations, Indonesia. Both nations can leverage their equation with ASEAN to contain China.
    • The Indo-Pacific region has the potential to facilitate connectivity and trade between India and Australia.
    • Being geographically more proximate than the US or Japan, India and Australia can emerge as leading forces for the Quad.

Associated Issues

  • Trade deficit: India’s trade deficit with Australia has been increasing since 2001-02 due to India-Australia Free Trade Agreement. It is also a contentious issue in the ongoing RCEP negotiations which India left.
  • India’s desire for visa reforms in Australia, which would permit more Indian workers to seek employment in Australia, remains unmet. India wants greater free movement and relaxed visa norms for its IT professionals, on which Australia is reluctant. Australia and India are yet to nurture a common bilateral ground to figure out the basis of their cooperation.
  • The formation of the Japan–America–India (JAI) partnership at the G20 summit in Buenos Aires in 2018 is cause for Australian concern. India’s unwillingness to invite Australia to participate in the Malabar naval exercise, despite Australian lobbying, has sparked speculation over the fate of the Quadrilateral Consultative Dialogue (the ‘Quad) involving India, Australia, Japan and the United States.
  • Building consensus on non-nuclear proliferation and disarmament has been a major hurdle given India’s status as a nuclear power. Trade and maritime security on the other hand seem the most viable points of collaboration. Although a defence agreement was signed in 2014, the defence relationship has yet to develop fully.
  • Although security has received a lot of significance in the relationship, in practice Australia-India defence cooperation remains relatively undeveloped. There are a considerable number of defence and security dialogues between the two countries, but none has been translated into more substantive cooperation.
  • Increasing Racist attacks on Indians in Australia has been a major issue. The relationship was further strained over the attacks on Indian students studying in Melbourne, and the resulting media coverage caused serious damage to Australia’s standing in India.

Need of the Hour

  • Upgradation of 2+2 talks. In addition, it may be prudent too for New Delhi and Canberra to elevate the ‘two plus two’ format for talks from the Secretary level to the level of Foreign and Defence Ministers.
  • Utilising current innovations in digital trade; such digitisation of economic activities has changed the landscape of trade, enhancing associations between economies and, in particular, South-South flows.
  • Removal of trade barriers would lead to an increase in the exports of these commodities, although the increasing number of disputes at the WTO with regard to the Australian sector can act as a serious impediment.
  • India and Australia have a strong track record of collaborating in research and innovation. The $84 million Australia-India Strategic Research Fund (AISRF) is Australia’s largest. The Australian Government’s $1.1 billion National Innovation and Science Agenda presents new opportunities to engage with India. The agenda resonates well with India’s ‘Start-up India’ and ‘Make in India’ campaign.
  • It is evident in policy areas such as maritime security, climate change, energy security, law enforcement, governance and the politics of security institutions.
  • Engaging Indonesia, Japan, France and Britain for securing Indo-Pacific
  • An ‘engage and balance’ China strategy is the best alternative to the dead end of containment. The role of the US is of particular importance as it has recently been a driver of efforts towards bringing similarly aligned states in counterbalancing China.

Conclusion

  • Their ties are extremely important for the Indo-Pacific region which is in flux. They stand out for their solemn commitment towards democratic values, international peace, rule of law, development and multiculturalism.a

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