Australia’s trade relationship with India has been as a provider of industrial inputs into the Indian economy – through coking coal and other mineral exports. We have also been an energy source, through thermal coal, LNG and soon uranium.
Now the partnership is shifting to knowledge – through education, skilling, and innovation.
For the long term trade relationship with India, especially with the future impact of a Free Trade Agreement, the shift is to a three cornered and closer partnership based on industry, energy and knowledge.
“Now the partnership is shifting to knowledge – through education, skilling, and innovation.”
Our political and business leaders need to understand that India’s globetrotting Prime Minister Narendra Modi is committed to being a change leader – from his own humble experience as the child of a tea seller, he drove rapid change as Chief Minister of his home state of Gujarat and now aims for change across the nation.
He is travelling the world in part to attract the private sector investment he needs to create change – and Australia although being the world’s fourth largest funds management country has very few dollars directly invested in India. Investment and trade do go together, so the next phase of our relationship requires our superannuation and finance sector to invest in India.
He is getting results – data compiled by Foreign Direct Investment markets, a service of the Financial Times newspaper, showed that India attracted US$3 billion more than China and US$4 billion more than the U.S. for greenfield projects (projects that involve overseas firms building new production facilities in a country as opposed to buying or renting existing facilities) during the first half of 2015.
“But knowledge is the new driver of our trade relationship.”
We risk being the “odd one out” on investment – Invesco recently bought a Mutual Fund in India’ and joined all the other global asset managers who have taken a stake in Indian funds – Schroders, Standard Life, SunLife, Prudential, Robeco, Natixis and Nippon to name a few.
But knowledge is the new driver of our trade relationship, with Modi’s programs for ‘Skills India’, ‘Digital India’, ‘Make in India’ and ‘Smart Cities’ all needing an educated population and knowledge service providers.
At a higher level, knowledge can provide the much needed levels of innovation. Australia and India have a joint research fund, but the real outcomes in innovation depend on commercialisation, which is the focus of a major two country forum next year.
Australia and India face the age old challenges of making a difference in India – this is truly the “country of countries” where there are some 26 major languages and no overarching view of what India actually is. Politics is conducted with high energy and disputation – and the recent defeat for Modi’s party in the state of Bihar suggests that the Congress Party is rebuilding and politics will continue to be fractious.
“Politics is conducted with high energy and disputation.”
To grow our trade relationship with India, Australia will have to make changes to match this emerging market.
A good start would be freeing up our TAFE sector so it can meet the huge demand for skills upgrade – right now our TAFEs are restricted to providing Australian level trades training to a market that does not want it. Few have made any impact in India as a result.
Then we should work harder to create fully coordinated responses to new opportunities such as the building of 100 Smart Cities – other countries such as Japan and Canada have done deals already simply by taking a collaborative group providing the finance, design, planning, management, construction and other services these cities will need.
Every group of Indian political or business leaders who come to Australia are amazed at the high quality of our cities – and they want some of this to fix their chaotic and often dysfunctional cities at home.
We could extend this coordinated approach to most of our trade mission activity – instead of taking diverse groups of small businesses across, all pursuing their individual aims – we should bring together powerful missions with specific targets in areas such as healthcare, IT, cities, media, finance, agribusiness and more.
“We should bring together powerful missions with specific targets in areas such as healthcare, IT, cities, media, finance, agribusiness and more.”
Finally, our starting point needs to be an understanding that India has very low awareness of what we actually have to offer – beyond cricket and resources, Indians in general are not aware of our multicultural, dynamic and educated population. This suggests more needs to be done to push every aspect of our society.
The “soft power” approach of cultural relationships has huge potential – especially as Modi is making a big thing of promoting Indian cultural traditions such as yoga. The Australian World Orchestra recently stunned packed houses in three Indian cities under the baton of the great Zubin Mehta. We could do more if our galleries, museums, dance, music and design sectors could create activities with India.
The demand for education, skills and innovation – the knowledge economy – is going through the roof in India and we have the capacity to become a major knowledge partner of India, so long as we drill down through the diversity and complexity to find the real opportunities.
“Indians in general are not aware of our multicultural, dynamic and educated population.”
Michael Moignard is a Director of EastWest Academy Pty Ltd, a former Senior Trade Commissioner in Delhi, author of “Unfinished Business: Re-imagining the Australia – India Economic Relationship” Australia India Institute, August 2013, and “ Innovative pathways for services trade and investment” in Hullabaloo, the Fuss About the India – Australia Relationship, Australia India Institute, October 2014. Michael is a Fellow of the Australia India Institute.