[Answered] What is the current state of trade between India and Australia? Discuss the potential for further growth in bilateral trade and investment.

Recently PM Modi went on a 3-day visit to Australia which led to the deepening of ties between the two nations. Both leaders felt the need to sign Comprehensive Economic Cooperation Agreement to deepen trade relations. India is Australia’s sixth largest trading partner with two-way trade in goods and services valued at $46.5 billion in 2022.

Significance of the relationship:

• Both nations agree on the principle of a “ free, open, inclusive, and prosperous Indo-Pacific”.
• Australia’s geo-strategic location in the Indian Ocean acts as a gateway for Pacific Islands and other small islands.
• There is a significant population of Indians in Australia at about 3% which is crucial for maintaining people-to-people ties and enhancing trade relations.
• Australia is key to India’s energy security needs as both have signed nuclear cooperation agreements and India can secure LNG supply from Australia reducing dependence on the Middle East.
• Both nations can cooperate in multilateral forums like QUAD, Commonwealth, Indian Ocean Rim Association (IORA) & ASEAN Regional Forum on issues like the environment, China’s Belligerent policy in Indo-Pacific, and ensuring rules-based International order.

What are the challenges in India-Australia Relations? 

• Ukraine crisis: Both nations differ in their strategy regarding Ukraine Russia conflict. Australia has taken a position against Russia while India has refrained from open criticism.
• China’s Pressure: China has dubbed QUAD as “Asian NATO” and has threatened Australia with an impact on trade relations. China is Australia’s largest trading partner.
• Sentiments against India: Recently, there has been witnessed a rise in anti-Indian slogans, and graffiti across Australia with attacks on Indians, their property, and temples vandalized.
• Miscellaneous issues: issues like the Adani coal energy project, and visa restrictions for Indian professionals and students have caused strain in relationships.

Way forward:

• Enhance diplomatic cooperation: The decision has been taken to open an Australian consulate in Bengaluru and an Indian consulate in Brisbane.
• People to People ties: An agreement has been finalized on Migration and Mobility to increase opportunities for students and businesspeople to enhance cooperation between two nations. PM Modi has spelled out the “three D’s” – Democracy, Diaspora, and Dosti to strengthen relationships.
• Energy Cooperation: Both nations should pursue active cooperation in nuclear energy fulfilling the terms of the Nuclear agreement. The establishment of the India-Australia Hydrogen Task Force will advise on opportunities to accelerate the manufacture and deployment of clean hydrogen.
• India-Australia Economic Cooperation Trade Agreement (ECTA): This has resulted in an immediate reduction of duty to zero on 96% of Indian exports to Australia and zero duty on 85% of Australia’s exports to India.