India-Australia Relations: A Deeper Engagement

26 Apr, 2006    ·   1998

Ashok Sharma traces the recent upturn in India-Australia relations and its future prospects

The March 2006 visit of Australian Prime Minister John Howard to India was significant in many respects. The visit can be seen in the context of India's emerging economic status in Asia and the Indo-US nuclear deal. A delegation of twenty Australian businesspersons from banks, transport and resources companies, and universities accompanied Howard. They signed a number of agreements and memorandum of understanding, which focused on promoting business, tourism, science and technology, educational exchanges and cultural links.

Currently, India is Australia's 12th largest trading partner and Australia's sixth largest market for exports. Last year, Australia sold goods and services worth A$ 7.4 billion to India, while its imports were A$1.8 billion. In 2004, bilateral trade recorded A$ 6.54 billion, in which India's exports were A$ 1.12 billion and India's imports were A$ 5.42 billion. With a high economic growth rate of 7-8 per cent, a rapidly growing middle-class and a competent professional manpower, India has advantages that attract many developed countries as a trading partner. John Howard's visit indicates that Australia too wants a stake in the growing Indian economy pie.

There is a lot of potential to develop economic relations between Australia and India. India needs Australia's support to become a member of the Asia-Pacific Economic Co-operation (APEC) organization. Indian companies like TCS and Infosys are establishing units, and competing in Australia's market. India imports coking coal and is Australia's third largest market for this product. The trade in textile, thermal coal and energy sector also offers significant potential.

In the education sector, Indian and Australian institutions signed agreements for exchange and joint research programmes. These agreements were signed between IIT Mumbai and Monash University, IIT Mumbai and University of New South Wales, and IIT Chennai and Queensland University of Technology. Howard announced a grant of A$25 million for student exchange and collaborative programmes.

John Howard also sought more Indian students to study in Australia. In 2005, approximately 25,000 students went to Australia for studies under different programmes. In fact, Australia is fast becoming the desired destinations for Indian students. In 1995, only 270 Indian students were present in Australia, whereas now, 27,000 Indians are studying in Australia. It is a reasonable destination in terms of opportunities, tuition fees and cost of living as these are relatively less expensive than the UK and US.

Indian-Australians form a very influential diaspora. Although not active politically, Indians-Australians have, however, started to play a constructive role in Australia-India relations. This will also help in promoting tourism and people-to-people contact. Some of the MoUs signed involved enhanced defence cooperation in the areas of training and maritime cooperation, defence industries and defence R&D. It also envisages setting up of an India-Australia Joint Working Group on defence for guiding and monitoring the on-going defence cooperation between the two countries. Other agreements include a trade and economic framework, an air services agreement, MoUs on customs and biotechnology, and a letter of intent on establishment of a strategic research fund.

India is exploring nuclear energy options. India needs uranium from Australia's vast reserves, which accounts for 40 per cent of the world's total reserves and the Indo-US nuclear deal could clear suspicion and doubts in Australia about uranium supply since the US and Australia are close allies. On a visit to Australia in March, US Secretary of State, Condoleezza Rice, mentioned India as a rising power in Asia and stressed for a deeper engagement with India. On 21 March 2006, US President, George W. Bush spoke to Howard on the issue of uranium supply to India. Although a concrete agreement did not emerge from talks between John Howard and Manmohan Singh on uranium supply to India, the impact of the Indo-US deal is that Australia is showing flexibility in its stand of uranium supply to India's civilian nuclear programme.

Earlier, the perception about India in Australia was not favourable for business ventures. India-Australia relations were less than ideal after India's nuclear test in 1998. But, the recent positive developments indicate that the India-Australia relationship is gradually moving towards a deeper engagement based on mutual interests.