A Convergence
of Interests
By Dev Varam

There is a great convergence of interests between India and Australia. Centuries back, there had been trading between Southern India and Australia, a tradition that has survived. It has flourished in modern times. Both India and Australia are democracies and members of the Commonwealth. Both speak English and share a passion for cricket. At this juncture, relations between India and Australia are poised to enter a glorious phase. Both are implementing economic reforms, though India is a late entrant and is trying to catch up with free market economies, such as Australia. Already there is a boom in bilateral trade between the two countries, which is expected to receive a propulsive thrust with the arrival in India of Australian Prime Minister John Howard on March 5, 2006 to conclude concrete pacts with his Indian counterpart Manmohan Singh, covering a vast range of issues of mutual economic interest

Days ahead of his second visit to India in six years, Howard talked about what he would expected from his four-day visit. “During my visit it is anticipated that a number of agreements will be signed in various fields including trade, defence, science and air services,” he said.
Besides New Delhi, Howard will be visiting Mumbai and Chennai during his four-day stay in this country. “I will be accompanied by a high-level delegation of business representatives with interests in India, whose presence demonstrates the importance Australia places on deepening commercial linkages with India,” Howard said.
In recent years India has embarked upon a path of reform, transforming itself into a dynamic and vibrant economy. In 2005, two-way trade between Australia and India in goods and services reached $9.4 billion.
“My visit will be a timely opportunity to encourage further expansion in our already productive relationship, “ Howard said, adding, “This visit will be an important opportunity to advance Australia's foreign and trade policy interests with a country of key and growing importance to Australia.”
Howard and the members of his delegation will hold talks with Singh and his Cabinet colleagues holding key economic portfolios. He will also call on President A.P.J. Abdul Kalam and Congress Party President Sonia Gandhi.
“India is an increasingly influential global and regional player whose interests converge with Australia's. We work together constructively on key international issues most recently on the Asia Pacific Partnership on Clean Development and Climate and at the East Asia Summit and the discussions I will have while in India will add impetus to our growing strategic relationship, ” Howard said.
The Australian Prime Minister, who appreciates India-s new-found passion for reforms, knows that the strength of the Australian economy is the product of many past economic reforms, as he put it in a New Year message to his people. That reform process was maintained to the full in 2005, he said, adding, “It must, and will, continue in 2006.”
Howard's perception of a resurgent India was reflected in what Australia's Minister for Foreign Affairs Alexander Downer said during his visit to India some months back Interacting with Indian businessmen, Downer said: "First, India is a more important country, these days, both globally and regionally. That is a product of India's strong economic growth resulting from economic reforms. Second, India's economy will continue to grow at least 6.0 percent per annum. Third, India is increasingly expanding its interests and also its diplomatic reach into Australia's areas of particular economic and strategic interest. India, in other words, simply matters a lot more to us today than it did decades ago."
Bilateral trade between India and Australia has been growing at a very fast pace. The five-year trend in the growth of Australia's exports to India had been 25 per cent per annum and in the year to the end of 2004, total trade with India grew by over 62 per cent. In 2005 India became Austrlia's sixth biggest export market, overtaking the United Kingdom as an export market. Australian trade and investment links with India have continueed to grow substantially. The trade relationship between Australia and India is very healthy. It can only become better and better in the future.
There is a strange similarity between India and Australia. The share of both nations in world trade is just one percent. Australia's trade in goods and services was valued at over $300 billion in 2003-04, or 1.0 per cent of total world trade. India's share was just about the same. Considering the natural complementarity between the fast-gowing economies of Australia and India, the scope for the two countries to garner a much larger share in total world trade is immense.
The strongest prospects for future trade and investment between Australia and India are commodities and services. Considering the immense scope in bilateral trade, the Australian Government launched the initiative of a Trade and Economic Framework (TEF) with India. Following this initiative, Austrsalia's Trade Minister Mark Vaile and India's Minister for Commerce and Industry Kamal Nath agreed to negotiate a trade and economic framework in Sydney, when they met recently. Australians see India as a country different from other struggling developing nations, a country full of opportunities for Australian companies. They see Australia is smart enough to look for and find space in a reinvigorated India.

Australia Committed to Expand Trade with India: Howard Australian Prime Minister John Howard's has said that his country is committed to expand trade with India. In a statement on the eve of his departure for India on a four-day visit, starting from March 5, 2006, Howard said: “I am delighted that a high-level business delegation of representatives from leading Australian companies will accompany me during my official visit to India, visiting New Delhi, Mumbai and Chennai from 6 to 8 March 2006. The business delegation includes some of Australia's largest companies, and all have substantial or growing commercial interests in India. The presence of the business delegation highlights the significant and growing trade and investment links that have developed between our two countries as well as Australia's commitment to expanding our commercial linkages. The policies of the Indian government have transformed the Indian economy into a vibrant and successful model for the developing world. India is now the world's second fastest growing economy and has averaged more than 6.0 percent growth per annum in the last five years. Our strong economic complementarities have led to total two-way trade in goods and services expanding to A$ 9.4 billion in 2005, and India is now our sixth largest merchandise trade export market. I am greatly encouraged by the promising opportunities that exist to build upon our already impressive trading links. I hope the Australian business delegation in discussions with Indian counterparts will be able to identify future commercial opportunities and enhance the profile of our mutually important economic relationship.”

Auto Component Industry
Australian companies are becoming increasingly interested in India, with its high rates of growth and as a large and growing consumer market with high disposable incomes. The fast industrialization of the country means a growth in demand for energy that has been met mainly by coal - some of which is imported from Australia. Another area of growth in bilateral trade is the automotive sector. General Motors in India is sourcing engines from General Motors Holden in Adelaide. Ford India's new car project is entirely designed and engineered in Melbourne. There are more opportunities for Australian auto companies in India than ever in components, technology, tooling and other after-market products. India is yet to open up the retail sector to Foreign Direct Investment in a big way and the Australian retail industry will enter into ventures in India. The food processing industry is increasingly conscious of the opportunities that are available in India.



IT Industry
Another promising area is India's IT industry. With nearly 25 Indian IT companies in Australia, including, Infosys from Bangalore, Satyam from Hyderabad and Polaris from Chennai, there are opportunities to take up joint development work and for Indian companies to market Australian ICT products in India and third country markets.
IT has been a major contributor to India's economic resurgence. India also has one of the fastest growing telecom markets in the world and is a hotspot for IT and R&D.
IT, finance, telecommunications, health, education, environmental services, biotechnology and media and entertainment are other areas that offer great opportunities I think for cooperation.
Indian and Australian companies can work together in IT. The Australian IT sector has done remarkable work in IT software, in which big Indian companies too have shown tremendous creativity. Although Australia is said to be a net importer of IT and India presumably is a net exporter of IT. The point of course is that you know statistics as measured you know - basic computers and so on, are much cheaper for us to import from other parts of the world but Australia is a net exporter of software and so I think that is an area where we can perhaps do more to bring the Indian SME software writers and producers together with their Australian counterparts. And we need to look at ways of doing that.



Oil and Gas Exploration
There is annual road-show event on the Indo-Australian energy calendar, held to promote Australian oil and gas exploration acreage within India. The roadshow comprises a seminar which provides further information on the process by which Indian corporation may obtain exploration acreage in Australia as well as information on the geological make-up of that acreage.

Working Group on Energy and Minerals
The Australia-India Joint Working Group on Energy and Minerals (JWG) was established in 1999 and its aim is to facilitate the exchange of information on energy and minerals policies and issues, promote trade and investment in the resources sector, enhance long-term bilateral cooperation, and stimulate the development of commercial relationships to the benefit of India and Australia. The Group's meetings are held alternately in India and Australia. The Joint Working Group delegations comprise both official and business representatives. Australian energy resources such as coal and associated technology and infrastructure, copper and other resources fuel India's growing economy and are important and growing components of the bilateral economic relationship. Australia offers advanced technology and services to contribute to India's continued economic expansion and India stands to benefit very substantially, from Australian investment. Particularly in the areas of energy resources, infrastructure development, agricultural services and food processing.
Australia and India have expanding interests in trade and investment in two key sectors. These are energy and minerals. The India-Australia Coal and Mining Forum is a joint initiative by the Indian and Australian governments, with the aim of facilitating increased bilateral trade, investment and collaboration in both the sectors, in which the convergence of interests is very strong, India is energy-starved and Australia is energy-surplus. In minerals too the interests of both countries dovetail with each other's.
This forum has been set up explore the opportunities for and also looks at the issues such as regulations, sustainable mining, mining technology services and equipment, coal blending and washing facilities, clean coal technologies, coal mine methane and skills and education. The Forum will provide members of the coal and mining industries an opportunity to showcase their expertise and capabilities, and explore investment opportunities.
The Forum aims to enhance the collaborative relationship between Australia and India to stimulate increased information exchange and joint projects, provide an opportunity for industry to showcase expertise and capabilities, and bring together Australian and Indian industry, research institutions and government.

Solar Energy
Australia has harnessed solar energy, from Darwin in the north of Australia to Adelaide in the very south of Australia. The solar energy vehicles, which don't need to be refuelled simply demonstrates the accessibility of the technology.
In an overall sense, there has been substantial investment over the years by Australia in solar energy and this has been technology, particularly photo-voltaic technology, which has been especially adaptable to rural communities in developing countries, such as India. Australia has a number of projects in Indonesia using this technology. Australian companies would certainly be interested in developing some of that technology in cooperation with Indian firms.

Education
Education is another area of the services trade between Australia and India which has shown remarkable growth. There are a number of Australian universities which are exploring opportunities to collaborate with Indian universities as well as establishing a direct marketing presence.
On the education front, the number of Indian students who studied in Australia in 2005 was 21,000, which might not sound very many but this number is growing every year.
India is Australia's top off-shore source of post-graduate students, the top-ranked source of Computing Science and Engineering students, and the second-ranked source of higher education students.
Australia is either the second or the third largest destination, off- shore destination for Indian students. We would say second - depends on how you measure British statistics and compare them with Australia. The United States is the largest - then Australia and the United Kingdom have very similar numbers, and then a number of other countries.
Australian universities are of a very high standard. Foreign students pay to go to those universities, excepting for a number of what are called Australian development scholarships which are funded by our aid agency, Ausaid. Gold is Australia's largest single export commodity to India, while pearls and gems, jewellery and textiles are amongst India's largest exports to Australia. But the most scintillating prospects for future trade and investment between Australia and India are twentieth and twenty-first century commodities and services.

Biotechnology
There is a tremendous amount of interest in India in biotechnology. In Australia, as you will know yourself, an enormous amount of work is being done in that sector as well. Australia has world leadership in a number of areas of biotechnology as India does, and there is need for some seed fund from government agencies which needed to be loked at.
In the field of biotechnology, Australia has been having discussions with the Department of Biotechnology. Australaia could give a bit more energy to this relationship - between Australia and India - and perhaps even between us, put in a little bit of money - seed money - into joint research projects and try to bring together as efforts are being made to do this, bring together our respective research institutes, in the area of biotechnology.
There is another industry in which India and Australia have common interests and which can only grow in terms of value. India is the world's largest producer of feature films and its producers and directors ar e looking fore newer locales for shooting and world class post-production centres. On both counts, Australia fills the bill. Till date, more than 40 Indian films were shot in Australia.
Australia has much to offer India in terms of its expertise in developing the infrastructure and services related to the staging and management of major sports events.
Tourism provides another promising area of expansion in the economic relationship with India, particularly in the context of the Commonwealth Games which will move from Melbourne in 2006 to New Delhi in 2010.