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Under the provisional agreement, tariffs will be removed on more than 85 percent of Australian goods exported to India, rising to almost 91 percent in 10 years. The Indian government predicts that two-way trade will double in five years due to the deal.
Peter Varghese, a former secretary at the Department of Foreign Affairs and Trade who drafted an India Economic Strategy for the Australian government in 2018, says he was “pleasantly surprised” by how comprehensive the interim deal was, given India’s traditional caution about trade liberalization.
“It reflects the political commitment of both parties to boost the economic relationship,” he said.
The deal was finalized by the Morrison government, but Labor now wants to go ahead with plans for a more comprehensive deal.
The flurry of high-level engagements between the two governments is another indicator of diplomatic momentum.
Albanese has already met Modi twice since he became prime minister, first at the Dialogue Quadrilateral in Tokyo just days after Labour’s election victory in May.
And soon there will be more: Albanese announced last week that he would visit India with a business delegation next March. Modi will then visit Australia for the annual Quad leaders meeting and Albanese will return to India in 2023 for the G20 summit in the Indian capital Delhi.
Australia has already received nine visits from Indian ministers this year, including two from the influential Foreign Minister, Dr S. Jaishankar. In February, Jaishankar noted that ties between Australia and India were improving “before my eyes.”
“If I had to look at five great relationships that have changed profoundly for us in the last decade, I would surely put Australia at the top,” he said.
Foreign Minister Penny Wong has met Jaishankar seven times in the six months since Labor won office.
There has been a lot of political symbolism to accompany the talks. In August, the sails of the Sydney Opera House were draped in the colors of the Indian national flag to celebrate the 75th anniversary of the country’s independence.
“The bilateral relationship is at a sweet spot right now,” says Varghese, who was Australia’s High Commissioner to India from 2009 to 2012.
A growing recognition of shared security interests in the Indian Ocean region and mutual concerns about China have been key factors.
Nitin Pai, director of the Bangalore-based think tank Takshashila Institution, says Beijing’s growing assertiveness has helped bring Australia and India closer together.
“It would have happened anyway, but Comrade Xi has done it much faster,” he says. “We’ve had a lot of help from him.”
David Brewster, a South Asian security specialist at the Australian National University College of National Security, says the conflict on the India-China border in mid-2020 was a turning point. Troops from the two armies became involved in a brawl in a remote region of the Himalayas that left dozens dead. It was the deadliest confrontation between the two nations in 45 years and tensions remain high amid Indian claims of Chinese territorial incursions.
“That triggered a big shift in Indian thinking about China and the region, and part of that was an upward movement in their view of Australia as an important regional partner,” says Brewster.
There is also concern in Delhi over increased Chinese naval activity in the Indian Ocean.
Varghese says that since the border crisis, India has been “much less hesitant” about its membership in the Quad Security Dialogue, or Quad as it is better known, which involves India, Australia, Japan and the United States. Since the first Quad leaders meeting took place in 2020, the forum has become a key pillar of Australia’s foreign policy.
Ian Hall, a professor of international relations at Griffith University, says Indian perceptions of Australia have also changed.
“There is a sense in Delhi that Australia is not a peripheral country with just 25 million people, but it is actually a major player, a trusted partner they can work with in the region, and one that is much more capable than expected. than was thought a decade ago. ,” he says.
Anil Wadhwa, a recently retired senior Indian diplomat, says there is “much more trust” between the two nations than in the past.
“This relationship is certainly on an upward trajectory,” he says.
There has also been a marked uptick in defense ties between India and Australia.
This was underscored in August when Indian fighter jets took part in Exercise Pitch Black, a three-week training program involving international military aircraft in the Northern Territory.
The Indian Air Force tweeted a video of an Australian aircraft mid-air refueling two Russian-designed Indian Air Force Sukhoi Su-30MK fighters taking part in the exercise. “Ta for this one for the road. Hooray mates!” he said.
A later statement from the Indian government said Exercise Pitch Black was marked by a “bonhomie that will lead to lasting ties”.
Brewster says the footage of the in-flight refueling of Australian and Indian planes underscored the two militaries’ growing ability to support each other.
“The relationship with the defense is getting closer,” he says.
The rapidly growing Indian diaspora is another positive for the Australia-India relationship.
the 2021 census It showed that almost a quarter of the 1 million people who came to Australia from other parts of the world between 2016 and 2021 were from India, far more than any other country.
“The Indian diaspora will play an important role in expanding trade and investment and seeking new economic opportunities,” says Hall.
Varghese predicts that the Indian diaspora will also exert increasing influence in Australian politics, something that is already evident in state politics.
“As they have in Canada, the UK, the US and elsewhere, the Indian diaspora may prove over the next two decades to be the most politically active migrant group in Australian history since the Irish,” he said. in a speech at the beginning of this year.
“This will have positive implications for the priority our political leaders will give to the relationship with India.”
But the Australia-India relationship faces some long-term challenges.
Trade ties between the two countries have lagged behind rapidly improving political ties. India was Australia’s eighth largest trading partner in 2019-20, behind the relative minnows of New Zealand and Singapore. That year, Australia’s exports to China were worth nine times as much as exports to India.
Trade with India is also dominated by a limited range of goods and services. In 2021, just three categories – coal, international education and gold – accounted for 83% of the value of Australian exports to India.
The new trade deal promises to deepen Australia’s economic engagement with India, one of the world’s fastest growing major economies. In September, India overtook Britain to become the world’s fifth-largest economy, according to the International Monetary Fund. Only the US, China, Japan, and Germany have larger economies than India when measured in US dollars.
Discussions at the Australia India Leadership Dialogue, hosted by the Australia India Institute in September, highlighted a number of opportunities to expand economic collaboration, including new digital technologies, cybersecurity, higher education, critical minerals and clean energy. .
Varghese sees great potential for further Australian investment in India, which he describes as “a key part of the future relationship.”
But Singh cautions that outdated perceptions of India are common, especially in the business community, and that could hinder the growth of economic ties.
“There is a lack of Indian literacy in Australia,” she says. “There is a lot of work to be done to ensure that literacy improves.”
On the diplomatic front, the war in Ukraine has exposed the differences between the two countries. While Australia has joined other major democracies in condemning Russian President Vladimir Putin’s invasion, India has taken a neutral stance.
Delhi has a longstanding friendship with Moscow and is highly dependent on Russian arms supplies. Still, Hall says India’s reluctance to condemn Putin’s aggression and its willingness to continue trading with Russia has caused “a certain degree of irritation” in Canberra and Washington.
The contrasting responses to the Ukraine crisis show that the recent convergence of Indian and Australian interests only goes so far.
Matt Wade visited India and attended the Australia India Leadership Dialogue as a guest of the Australia India Institute.
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