India to respond to Australia’s White paper on trade

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The Indian economic strategy released last year by the Australian government – put together over eleven months by former diplomat Peter Varghese – has been hailed as a way forward to Australia doing business with India. The Indian government, showing their interest in forging a closer trade relationship with Australia, has commissioned Anil Wadhwa, former Secretary East in the Ministry of External Affairs, and former Ambassador, to explore similar opportunities from an Indian perspective.

Over the last six months, Wadhwa has been consulting both Indian and Australian companies in both countries, and is just a few weeks away from finalising his report.
Here are excerpts from a wide-ranging interview with him.
On the challenges and opportunities in the document An India Australia’s Economic Strategy to 2035
This type of a blueprint to enhance trade opportunities between India and another country has never been attempted before and to an extent, there was never an Indian template to fill in. I think it’s always good to be a pioneer and I think there could not be a better country than Australia to do that. There are so many synergies as far as the two countries are concerned – vibrant democracies, the growing diaspora from India as a great link, at least in the current day circumstances – so we see this relationship going from strength to strength in the future.
What we are looking for is not the past; we are looking at the current circumstances and the future, most importantly the future, and therefore this report is forward-looking, lays emphasis on fields for the future, creative ideas and areas in which we have not engaged with each other. So that will then complete the report, which is in three sections. The first is a macro section, which analyses our economies and the direction of the economies, and the gaps which are there; the second section is on the sectors which we have identified as promising (and some sectors which we have been engaging in but in any case need to be strengthened); and the third is the creative and the forward-looking industries and businesses and services which we will engage in in the future.
On areas of cooperation for India and Australia
We found that there are a number of areas of cooperation, actually. Many of them have not been utilised properly, probably because of lack of information about each other.
A second issue is the fact that both India and Australia have been looking at other partners for the same products and services and investment. But just to name a few, for example, there have been new areas which have opened up in natural resources. India has been a partner of Australia’s national resources in coal, gold, copper etc., but with the new international exploration program which has been announced in India, new opportunities for new minerals have opened up. Therefore, minerals like lithium, nickel, cobalt, the rare earths, all become important. And this program is well on its way – there is a target of 2030 and beyond – and obviously the basket of natural resources for which India is looking to Australia becomes much larger. We also have an ongoing relationship in LNG for instance; right now there’s a lot of commitment from Qatar as well as concern, because our LNG terminals used to be on the Western seaboard, but now we have a new port on the Eastern seaboard which has just opened, and that will bring with it the possibility of freight costs coming down from Australia.

We’ve also looked at renewables, with a big emphasis on solar and wind energy. The whole effort to bring solar, nuclear, and wind energy higher into the overall mix for energy in India, and the fact that India is a pioneer for the International Solar Alliance, makes it even more important.
Australian technology – like remote sensing and management of large farms – can be used in the Indian context as well. So, there is a give-and-take in this situation, and it would be also useful for both sides to look into creating joint ventures which can service both countries. We’re also looking at agriculture and agricultural technologies where Australia offers the possibility of tracks of land which can be cultivated by Indian investors – I’m thinking, for example, of cotton. There are possibilities of forming joint ventures with Australian companies which are already in the market, food processing technology and processing of machinery, and manufacture of machinery in India with use in both countries. A model example exists already – there are some companies which are doing this very successfully – and all we need to do is scale it up and advance it further.

In the field of pharmaceuticals, there is a big market for Indian biogenetics, and Australian and Indian companies teaming up to produce higher quality vitamins for instance. That’s one progressive area.
We also have the IT side, where Indian companies are here in the market; they are into services in a large way. What’s happening with industry all over the world is we are going into Industry 4.0, so we will need appropriate technologies and products to be developed to meet that challenge in terms of AI and machine learning etc., and here again Indian companies are very well equipped to work with Australian companies. In the field of banking we looked at financial technologies, where both sides can cooperate. Education is very high on the agenda in the India Economic Strategy 2035. From the Indian perspective, I think it’s important we seize the STEM collaboration. We also look at arts and liberal arts and areas in which there is a shortage of people who can work in sectors like musicology or curatorship for example. And so you need to create another cluster of engagement between a different set of universities altogether. Universities in India are looking for joint degrees, ramping up of the PhD programs on both sides: they’re also looking at scaling up the skills development program, which Australian companies are involved in. One way to do that is to train the trainers for instance, which we will emphasise.

We need to create a special fund for innovation, because that’s emerged as a major area for collaboration. Tourism is a growing sector between our countries, and more tourists from India are coming in to Australia. One of the ideas that we discussed in many places is to encourage the shooting of Indian films, which makes a destination more popular, and Australia is ideally placed to do that. We have the health technologies and health equipment: India being a consumer market, we can scale up the technological progress that Australia has made in this field.
Water technology is big in demand in India. So cleaning of water, preservation of water, and remote operation of water services through solar energy would be great areas to collaborate in. I already told you about the food chain – so just processing and food preservation – because 35% of food in India is wasted still. Then we need coal chains and also warehousing and storage. So, all companies who are in this sector should look at India quite seriously. Sports technology is an emerging area – sports management, where some Australian companies have entered India already – needs to be scaled up further. And then, from India to Australia, we also have a demand for Indian medicine – Ayurveda, for instance – which needs to be expanded in scope in terms of opening more spas, new treatment areas etc. across Australia.
Finally, with the infrastructure demands in India, the Australian pension funds must enter India: this is the right time. We feel that the earlier they do so, the better, so that’s going to be another recommendation.
On why Australian companies hesitate about doing business with India
I think it’s a question of taking the plunge and going into a new market. I think it’s in the intrinsic nature of Australian companies to be a little more risk averse to situations because Australia is a good market by itself. If you need to scale it up, then you must look at markets like India. Of course, Australia has been engaged with China, but if you analyse the exports from Australia to China, 80% of it is natural resources. So what we are looking at, is a more complex kind of relationship with India – both are vibrant democracies; they have needs which complement each other, and so far it’s not happened because there was no focus on the sectors that I just told you. India has started a series of new programs now, starting from Digital India to Make in India to Clean in India, and then there’s a focus on start-ups as well. Education is receiving a lot of attention. So all these areas are those which Australia is quite adept at. There is also a focus on healthcare as you know – a new program Aysuhman Bharat was launched recently.
On those one or two big opportunities for Australian businesses in India
Education, because of skilling. There’s a lot of demand for skilling, and so Australian companies which are in to skilling actually can’t meet the demand at the moment. So of course that’s one sector which isn’t very well developed. If I had to pick another sector, I would pick health technology, where the scale is huge, and if the technology is to be scaled up, it has to be in India because the demand is growing.

On the success of Australian companies in India, such as Macquarie
They had the patience, and they did not look for a return immediately. They have been in the market in India since 2002. Infrastructure projects typically have an 8-year gestation period for returns to flow in. Now that they’ve completed that period, their returns are good, they’re happy. They’re foraying into airports as well, bidding for airports, and of course the toll road business is doing very well.
On another Indian Prime Ministerial visit to Australia
I think because of the growing engagement between the two countries, you will see frequent visits from now on. Normally, it’s at least every two years or so, a stand-alone visit which should happen, if not every year. But our economies are coming closer together and geopolitically, India and Australia are coming together. So this is imperative.
On the Business Councils of the two countries
I think there’s room for improvement, frankly. The business councils are meeting, but those meetings need to get more focused, and they should be more sectoral.
On the Indian diaspora’s contribution towards trade
I think the diaspora in Australia is doing a great job as far as I can see. There is not much of an Australian diaspora in India unfortunately, but the diaspora here in Australia seems very active. They are helping the states where they are to formulate the strategy towards India. For example, I went to Northern Territory, which wants to engage in India with a particular state. Now their partners are officially Andhra Pradesh and Telangana for instance, but there is a 3000-strong Indian diaspora in Alice Springs – they are doctors and health providers and nurses. They are very well connected with the government in NT, and because of them there are very strong linkages which have developed with the state of Kerala. I think the NT government is now planning to sign an MOU with Kerala as well, which will help them do more business together with the help of the diaspora because they have created those linkages which never existed before.