Trade Sector Updates – Falling Exports, TIES, MEIS, Foreign Trade Policy, etc.

[op-ed snap] A road map for robust trade ties

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 3- Bilateral trade opportunity with Australia and area of cooperation in Technology and innovation

Context

The challenge for India and Australia is to transform people-to-people ties into a trade relationship.

People-to-people the two countries

  • Soft power: Soft power rather than hard economics has traditionally been the driving force behind India-Australia relations.
    • Cricket is a dominant theme that connects the two countries.
    • The Indian diaspora in Australia is a vibrant community that plays a robust role in connecting their country of adoption with their country of origin.

Trade relationship scenario

  • $31 bn bilateral trade: The trade between the two countries has been at a modest $31 billion, largely composed of resources like coal and other minerals.
  • No progress on FTA: Negotiations on a Free Trade Agreement, which began in 2011, have not moved forward significantly.
  • No progress on coal mining projects in Australia: The problems faced by the Adani Group to begin work on a coal mining project in Queensland did not go down too well with investors from India.
  • India Economic Strategy 2035 by Australia: One of the most widely commended initiatives has been the Australian government’s release of an India Economic Strategy 2035 Report.
    • It observes that no single market over the next 20 years will offer more growth opportunities for Australia than India.
    • It lays down a comprehensive road map for strengthening Australia’s trade engagement with India.

Development in digital technology and the role of youth

  • Development of new architecture: Meanwhile India-Australia trade has been steadily evolving into a new architecture underpinned by developments in digital technology.
    • There is a rise of a younger generation of entrepreneurs and a noticeable shift in the trade basket from resources to services.
    • Technology and young entrepreneurship make a formidable combination and should set the agenda for the future of bilateral trade relations.
    • About 80% of the Australian small and medium-sized enterprises are managed by young professionals.
    • The young can see issues like immigration and outsourcing with far more equanimity than the older generation.
    • An important role of young Australians: Young Australians are thus emerging as great champions of India-Australia trade relations.

Scope for engagement in innovation and trade relations

  • Tech. expertise of  Australia: There is also recognition that Australia is a laboratory of ideas, innovation, technology-led growth and university-industry partnerships.
  • Scope for India in innovation and trade: India is a large and demographically young market with a love for innovation and an appetite for new products and services.
    • These synergies should add momentum to a growing engagement in trade relations.

India’s weakness and Way forward

  • Weakest link and way forward: The weakest link in India’s exports to Australia is in merchandise. India needs to look at three broad areas.
  • First-Focus on Market Research:  Despite globalisation, markets are country-specific and culturally sensitive.
    • Indian companies will need to invest a little more in market research on Australian consumer expectations and lifestyles.
  • Second-Brand creation: Australia is a brand-conscious market while India has not created a single consumer brand of international acceptance.
    • Only when products are visible across the world’s shopping malls and supermarkets displaying their own brands that India will be recognised as a major player in the global markets.
  • Third-Innovation: Innovation is emerging as the single-most-important factor for sustained success in every sphere. Global trade cannot be different.

 

 

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