The current trend of geo-economics favours enhancement of investment and trade relationships with reliable partners. The Comprehensive Strategic partnership between India and Australia announced in June 2020 along with agreements on providing mutual logistics access and enhancing defence and security cooperation provided a spurt to their ties. Their partnership in the Quad and participation in Malabar exercises have reinforced their shared security outlook. The Australian, Indian and Japanese Trade and Commerce ministers have announced broad contours of a Resilient Supply Chains initiative.

The recent Indian reforms in the mining, banking, MSME, agriculture, power, defence, space, electronics and textile sectors have been far reaching. Incentives have been announced in a slew of sectors under a Production Linked Incentive scheme to boost manufacturing. New funding has been announced for the healthcare sector. Corporate tax rate has been brought down, retrospective taxation abolished, and India today is focussing on simplifying the difficulties faced in land acquisition, labour laws reform, and liquidity in order to attract new investments.

An India Economic Strategy to 2035 Report, launched by Australia in November 2018, and a reciprocal Australia Economic Strategy Report released in 2020 by India have both laid down the roadmap for the future. The Australian government’s update to the 2018 report was released on March 22 — it has responded to the rapidly changing global developments, the need to ensure safe and secure supply chains, and the ongoing Indian reforms and developments in the country.

Australia also announced initiatives to address the bilateral investment cooperation in emerging sectors such as critical minerals, clean energy, cyber and critical technologies and space as well as the priority sectors of infrastructure, education, tourism, agribusiness and energy.

Ideal strategic partner

India has emerged as an ideal strategic partner for Australia as it strives to overcome the challenges of rapid urbanisation and infrastructure development, resources like clean water, digital connectivity and health amenities for its growing and aspirational population.

There are excellent prospects for collaboration between India and Australia in some critical areas like science, vaccines, pandemic management, space and defence, critical minerals and related technologies, water resources, training and education, the circular economy, waste-to-wealth processes, grains management and logistics, and cyber technologies.

India needs Australian commodities like lithium, cobalt, vanadium, rare earths, coal and LNG for its development needs, as well as technology to solve problems in areas such financial inclusion, healthcare, and education, jointly with Australia.

Australia has reserves of 21 of the 49 minerals identified as critical for India’s future strategy, especially the e-mobility programme. The New Education Policy in India has opened up possibilities for further collaborations with Australian universities. New possibilities for collaboration have opened up in the defence and space sectors. India has a large technology resource pool which is complementary to Australian requirements. Australian super funds and infrastructure companies are presented with increasing opportunities in the infrastructure and toll roads sector.

Investments are already driving the trade relationship between India and Australia — roughly $20 billion has been invested by them into each other’s economies. Bilateral trade this year is poised to cross $27 billion. However, liberalisation of trade and services, and steps towards ease of doing business will add immensely to this momentum.

Goods, services, rules of origin, sanitary and phyto sanitary measures, Customs procedures, and legal and institutional issues including dispute settlement, have been included in the agreement. Over 95 per cent of India goods will get zero duty access on day one of the pact coming into force, with the rest set for phased concessions. About 70 per cent of Australian goods will get concessional duty access from the first day.

India will gain from duty-free access for a host of labour-intensive sectors like textiles, gems, and jewelry, leather and footwear and from a liberalised visa regime allowing easier movement of the professionals. Sensitive sectors like dairy, sunflower oil, wheat, rice, walnuts, medical devices, beef, etc., have been kept out of the agreement, while Australian wines will see reduced duty from 150 per cent to 25 per cent over a period of 10 years in two categories, thus taking care of the Indian domestic wine industry. Australian coal, which attracts 2.5 per cent duty, will also enjoy duty-free access.

Liberalisation of the services sector in 100 different sub-sectors will encourage flow of professionals. Corporates will now look at the opportunities provided by this agreement with renewed interest.

The writer is a former Secretary (East) in the MEA. Currently, he is a Distinguished Fellow with the Vivekananda International Foundation, New Delhi