The Surge in Indo-Australian Bilateral Trade

The Vibrant Spirit of Entrepreneurship By Dev Varam

When two vibrant economies collaborate, bilateral trade is bound to boom. Australia's economy has been on the upswing for more than two decades. Powered by economic reforms, India has also caught up with the momentum of globalization. Their outlook being similar, the two countries have quickly developed a mutually beneficial synergy. The result is striking. Bilateral trade has grown by leaps and bounds. In 2005-06, Indo-Australian trade in goods and services amounted to $9.4 billion. India is now Australia's sixth largest merchandise export market. India as an export destination has grown faster than any of Australia's other top 30 export markets over the past five years. While the two governments played the role of facilitators, It is the businessmen from both sides who have boosted the bilateral trade. In fact, the thrust of Australian Prime Minister John Howard's speeches during his India visit in March 2006 at various meetings had been similar- that governments as facilitators should leave the business of promoting business between the two nations to businessmen. It is the vibrant entrepreneurial sprit of businessmen from both sides
that has been the driving force behind the surging
Indo-Australian bilateral trade.

Indo-Australian industrial collaboration is wide-ranging. An Australia-India government and industry joint working group, established to implement a Memorandum of Understanding signed earlier, held its first meeting in Delhi on 21 October, 2005. The MoU runs for four years, to October 2009. During Prime Minister Howard's visit, six bilateral agreements were signed: an air services agreement; a trade and economic framework; MoUs on customs cooperation, defence cooperation and biotechnology; and a letter of intent to set up a strategic research fund. These agreements target areas of common and emerging interests. There is also a MoU between the two countries on fighting terrorism. Now the opportunities for the business communities of both countries are vast as they are diverse.
A striking example of Indo-Australian industrial collaboration is that Australian coal is used in more than 50 per cent of the steel that is produced in India. An example of trade is that Australia accounts for 25 per cent of India's gold imports. Of all the agreements, the Australia-India Trade and Economic Framework will provide an important basis for the facilitation and the future development of the trade and economic relationship and it will encourage closer strategic cooperation in many of the key economic sectors. Besides trade and industrial collaborations, Australia is becoming a favourite destination for Indian students, and India a source of the skilled workers needed in Australia. There have been many successful industrial collaborations between Indian and Australian companies. Invest Australia, the official wing of the Australian government that facilitates the flow of investments into Australia has helped many Indian companies to get a foothold in that country.



Strengthening ICT Links with India
One of the significant areas of collaboration is the Information and Communication Technology sector. Satyam Computer Services, a leading global provider of IT services based in the southern Indian city of Hyderabad, launched its largest Global Development Centre (GDC) outside India in Melbourne, Australia. This GDC is serving as a major technological development and software support Centre for the company's Asia Pacific operations. ”We believe there is considerable business opportunity in Australia for companies such as Satyam. This GDC forms an integral part of Satyam's Business Continuity Process model which allows seamless support to our global clients," Ramalinga Raju, Chairman of Satyam Computer Services, said.
During the recent CeBIT Australia 2006 show, Invest Australia welcomed the second annual inward delegation of India's National Association of Software and Service Companies (NASSCOM) as further evidence of the significant value proposition that Australia's ICT industry had to offer. The ten-company delegation visited Sydney and Melbourne looking to build upon linkages forged in previous visits, and take advantage of the major business opportunity that exists between India and Australia in the ICT market.
Of specific interest to the NASSCOM members were the many sectors within the Australian industry that have invested heavily in IT, including healthcare, finance, defence, education and transportation. Partnerships were a key theme of the visit, timed to coincide with Australia's leading ICT industry event, CeBIT Australia. The delegation was of the opinion that Indian and Australian companies, particularly within the SME segment, can leverage their complementary strengths and capabilities to develop products and services for new markets, with Australia serving as a cost effective base for emerging Indian companies to tap neighbouring regions.
Australia and India signed a Memorandum of Understanding in Delhi last year to promote further cooperation between the two countries in developing their information and communications technology (ICT) industries and to strengthen their bilateral relationship and business linkages in ICT. “India, like Australia, makes a substantial investment in ICT. This MoU is a formal expression at government to government level of our mutual desire to foster the good relationship between our two countries,” Australian Minister for Communications, Information Technology and the Arts, Senator Helen Coonan said. The MoU covers cooperation in activities including e-government, e-commerce, e-learning, IT security, Internet applications, advanced communications technologies and software and multimedia content development.
Industrial Collaborations
The tractor division of Mahindra & Mahindra Limited, India's biggest tractor manufacturer, will soon be rolling out its tractors from its new Australian assembly plant. The 2500-square-metre industrial unit will locally assemble and market some 200 low-horsepower tractors this year, increasing to about 800 in the coming years. The Mahindra Australia factory, located in Brisbane, Queensland, will target the growing farming markets in Queensland, New South Wales and Victoria.
The focus on investment from India has increased considerably over the last couple of years with a number of high level visits to India, including Invest Australia's proactive involvement through a greater focus on India. A delegation led by Invest Australia's CEO, Garry Draffin in June 2004 met with executives from a wide range of Indian companies in New Delhi, Mumbai, Bangalore and Chennai. 'As a result of these meetings we are now able to establish what resources we need to have in place to further facilitate opportunities for Indian companies to invest in Australia.' said Draffin. The investment by Mahindra & Mahindra Limited, which was assisted by Invest Australia, is the latest in a number of recent Indian investments into diverse sectors of the Australian economy such as mining, services and manufacturing.


Joint Research
During his visit to India, the Australian Prime Minister announced a new A$25 million bilateral research program with India and new Endeavour India Research fellowships. “The establishment of the A$20 million Australia-India Strategic Research Fund will increase significantly Australia's science and technology engagement with India, and will promote multi-disciplinary research collaboration between the two countries,” Australian Minister for Education, Science and Training Julie Bishop observed at that time. She also welcomed the signing of a Biotechnology Memorandum of Understanding between the two countries which will facilitate increased research cooperation in this significant field of science. “These initiatives demonstrate the importance the Australian Government places on our education, science and technology relationship with India.”

Suzlon Energy
Energy is a key area in which there have been opportunities for Indian companies to invest in Australia. Indian wind power company Suzlon Energy has launched its Asia Pacific headquarters in Melbourne. The new facility highlights the importance of the Australian market to Suzlon Energy's international operations and provides a launching pad to expand into wider Australian operations.
Suzlon Energy is the world's sixth largest wind generation company with offices located worldwide. Suzlon Energy integrates consultancy, design, manufacturing, operation and maintenance services to provide customers with total wind power solutions. The Melbourne facility will be responsible for sales, marketing, project implementation and service support for the emerging Asia Pacific Market. With operations now based in Victoria, Suzlon Energy hopes to expand across Australia with contracts in South Australia and New South Wales. Bestowed with abundant natural resources, many of which are largely unexploited, and supported by a Government committed to renewable energy resources, Australia has emerged as an ideal place for investment.

Education
There is already a very solid relationship between India and Australia in the field of education. India is the second largest source country for international students in Australia, and Australia is the third most popular destination for Indians seeking education abroad. Links between Australian universities and Indian institutions continue to develop. For example, Monash University, in collaboration with BHP Billiton, is partnering with the Indian Institute of Technology Mumbai (IIT Mumbai) to establish a joint institution for scientific research. The University of New South Wales has also formalised a partnership with IIT Mumbai to develop collaborative research programmes in computer science.