By Mahadevan Shankar
The current bilateral two-way trade between Australia and India is estimated at $46.5bn in value as per information available from DFAT. This historical Comprehensive Economic Cooperation Agreement (CECA) between Australia and India which has been over ten years in the making, got significant thrust to move ahead in April 2022 with the signing of the Economic Cooperation Trade Agreement (ECTA) between both countries. Further details about the ECTA and its impact on bilateral trade has been analysed in our earlier article “India and Australia march ahead in step” on 11 April 2022.
During his keynote address at the Asia Society Policy Institute India held on 13 December 2023, Australian High Commissioner to India Philip Green delved into the fast pace of traction generated after the signing of the ECTA. According to HC Green, “this is what strategic alignment looks like: a mission to work together.” HC Green emphasised that there is an opportunity for “economic complementarity” that includes “the great prospects that our underlying commercial, entrepreneurial, and demographic strengths offer each other’s economies.”
HC Green further stated that the ECTA eliminated tariffs on most of the critical minerals needed for solar panels, electric cars, wind turbines, mobiles and more. And with the proposed CECA, which both countries are now negotiating, it will boost supply chains for the minerals India needs to drive its manufacturing and exports.
It is understood that the defence partnerships will be especially important between both countries, especially after the signing of the Comprehensive Strategic Partnership (#CSP) and nine related agreements on 4 June 2020 at the Virtual Summit between the Prime Ministers of both countries. Towards these defence related endeavours, during his visit to India in March 2023, PM Albanese was the first Head of State to visit onboard India’s second aircraft carrier INS Vikrant, indigenously built and launched by the Indian Navy. While onboard INS Vikrant, PM Albanese announced Australia will host for the first time, the 27 th iteration of the Malabar exercises bringing together the QUAD navies critical to maintaining security of SLOCs and merchant shipping operating in the IOR.
The Indo Pacific Regional Dialogue 2023 edition was hosted by the National Maritime Foundation of India at the Manekshaw Centre in Delhi from the 15 th to 17 th November 2023. As a panellist, I presented my interventions on the topic of “Overcoming Indo Pacific Supply Chain Challenges in respect of Rare Earth Elements (REE), Rare Metals (RM), and Energy Critical Elements (ECM).” I brought out a few key issues impacting these challenges and analysed them under the five key areas – Exploration and Technology, Markets and Investments, Government Regulations, Partnerships between like- minded countries, and Breaking down various legal and cultural barriers.
The building up of increased geopolitical friction and challenges in these aspects of REE, RM and ECM will impact and give direction to the future of maritime trade between Australia and India. With the latest announcements of the Indian government policy initiatives towards reducing cost of manufacturing semi-conductors in India, this will enabling large scale manufacturing of semi-conductors in India, the importance of supplies of such REE, RM and ECM from Australia to India has grown.
The Indian Minister Ashwini Vaishnav has announced pathbreaking initiatives towards three major Indian companies setting up US$15bn worth of operations to scale up the manufacturing capacity in India towards global demand for semi-conductors. This opens significant opportunities for Australian resources companies to supply the raw materials in the form of REE, RM and ECM highlighted above. The India Foundation organised the Indian Ocean Conference in Perth on 16 th and 17 th February 2024, which was jointly hosted by DFAT, Australia and MEA, India.
At this important event, many issues around the IOR security matters and such supply chain resilience issues were raised. The theme of the event “Towards a Stable and Sustainable Region” witnesses erudite panellists from over 40 countries in the IOR and beyond sharing their discerning analysis and insights on various matters impacting the IOR.
Australia and India being the two largest democratic economies saddling the IOR have a very important role to partner and collaborate with all the smaller countries in the IOR to ensure the development of the capabilities of all countries in this region, towards enhancing and maintaining the security of global sea trade, over 60% of which in value and volume is expected to flow through the IOR. I had the privilege of sharing my brief insights with a few key stakeholders and flagging the need for more cooperation between Australia and India.
Some of these key issues are also brought out in detail in the book “Why Bharat Matters” authored by Dr. S. Jaishankar, External Affairs Minister of India released in January 2024. In this book, the Minister states that the ascension by India into the global hierarchy is and endless journey. Hence it would be important for all global stakeholders to understand the transition being undertaken, whereby the country, India that is Bharat, is rapidly transforming itself from the status of developing country towards its target of a developed country by 2047.
In conclusion, India and Australia have charted their course to sail and ride the waves, as their trade picks up the strong tailwinds across the Indian Ocean waters, fostering deeper people to people relationships, leveraging the significant strength, talent and potential of the Indian diaspora living in Australia in implementing of the ECTA and the imminent signing of the CECA.
(The author is the Founder & CEO of Arzuh International, based in Brisbane providing Strategic Transaction Advisory Services. He has been a former global Big4 Accounting Firm Partner, Committee member of the reputed think tank Current and Strategic Affairs Forum (CASA), Honorary Adjunct Fellow at National Maritime Foundation of India and has contributed to the AES2020 report authored by former Ambassador Anil Wadhwa. Views expressed are personal and do not reflect the official position or policy of any of the above entities).
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