India & Australia

Bilateral Economic Cooperation:

India was Australia’s 4th largest export destination for its goods, 6th largest services trading partner and 5th largest trading partner in goods and services.

Bilateral trade: 22billUSD

Main exports : Pearls & gems, Rotating electric plants, Jewellery, textiles, and Medicaments

Main imports : gold, Coal, copper and copper ores, Crude Petroleum, Fertilizers.

balance of trade is heavily in favor of Australia; Indian trade deficit of about US$11 billion. On the economic front, the major concern is India’s burgeoning trade imbalance with Australia, which was the second largest that India had with any of its trading partners. Indian authorities are seeking greater access for Indian IT, pharmaceutical and fruit in the Australian market. However, Australian tariff rates and other trade restrictions are low and Australia has an open market and one of the lowest tariff rates among OECD countries. So the trade imbalance would not seem to be a consequence of Australian trade restrictions; rather, it is the inability of the Indian manufacturing and services sectors to penetrate the Australian market and compete with products from other countries, particularly from China and Southeast Asia that appears to be the main problem.

India has had a Bilateral Investment Promotion Agreement (BIPA) with Australia since 2000.

OPPORTUNITIES
Potential for Indo-Australian cooperation exists in infrastructure development including roads, ports, airports and railways; power sector; mining; oil and natural gas including LNG; biotechnology; drugs and pharmaceuticals; information technology; water management, soil conservation and waste disposal; food processing and agribusiness; film and television; processing of gems and jewellery; tourism; and education.

The reasons for the downward spiral in bilateral relations are not unheard of: Australia’s decision to deny Uranium to India, Kevin Rudd’s inclination towards China, and repeated incidents of attacks on Indian students in Australia. Australia’s damage control attempts on the issue of racial attacks on Indian students led to high profile visits of its leaders.

Rudd’s 2009 visit:

1.    decision to upgrade bilateral relations to that of a ‘strategic partnership’. This decision would strengthen partnership in the areas of political, economic and security interaction, energy and natural resources, science and technology and people-to-people contacts.

2.    A Joint Declaration on Security Co-operation

3.    India-Australia CEOs Forum which would involve prominent companies from each country across the spectrum of key economic sectors

4.    Memorandum of Understanding in the Field of Water Resource Management.

5.    Joint Study Group Report on the feasibility of Free Trade Agreement, consider a Comprehensive Economic Partnership in East Asia. (East Asia Summit), consider further Australia’s Asia Pacific community initiative.

6.    Australia’s firm support for India’s membership of the Asia Pacific Economic Cooperation grouping

Knowledge Partnership:

·         Australia-India Strategic Research Fund

·         collaborative projects in education from primary school

Some Major bilateral agreements signed between India and Australia include:

• Joint study Group on feasibility of an FTA
• Trade and Economic Framework Agreement
• Joint Australia-India Consultative Committee on Legal Services
• Joint Working Group (JWG): Biotechnology
• Special Agreement on Cooperation in Science and Technology
• Agreement on the Promotion and Protection of Investments
• Agreement for Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income
• Air Services Agreement

Australia has become an attractive destination for Indian students. Estimates indicate the presence of nearly 70,000 students in various Universities all over Australia.

Perhaps the biggest issue between the two countries is uranium. India has been demanding that Australia lift the ban on uranium exports to India, pointing out that nuclear energy could be a climate-friendly way of helping to meet the massive electricity needs of a nation seeking to lift hundreds of millions out of poverty. This has become a central issue and a ‘barometer of trust in the relationship’ for India and a thorn in Australian government policy as it considers whether it can encompass selling uranium to India for civilian use as it does to China and Russia and reduce Indian misperceptions of Australia ‘tilting China’s way’.

The devised alternative route to energy cooperation is trade in coal and Liquefied Natural Gas. Australia recently signed the first long-term LNG supply deal with Petronet India Limited. This 20 year agreement will enable India to take gas from the Gorgon oil field which could just be the beginning of a big partnership in the energy sector.

Australia’s decision to invest AUD 50 million on Green Technology in India is an attempt to bridge the gap on issues of climate change. 

India and Australia would push for a bilateral Free Trade Agreement to give a fillip to bilateral trade

The Australia-India Council (AIC) was established by the Australian Government in May 1992 to broaden and deepen Australia-India relations through contacts and exchanges in a range of fields which promote mutual awareness and understanding. The AIC is a non-statutory body

S. No.	Agreement/MOU	Signed in
1	Double Taxation Avoidance Agreement.	July 1991
2	Agreement on Bilateral Investment Promotion and Protection	February 1999
3	MOU on Sports Co-operation	February 1999
4	MOU on Exchange of Statistics for the Development of Statistics and Promotion of Best Statistical Practices	April 1999
5	Memorandum of Understanding on Arrangements for recognition of equivalence of food inspection and certification systems covering fish and fishery products exported from India to Australia.	December 2002
6	Trade and Economic Framework Agreement	March 2006
7	MOU on Defence Cooperation	March 2006
8	MOU on Customs Cooperation	March 2006
9	Air Services Agreement	March 2006
10	MOU on Cooperation in Biotechnology	March 2006
11	Letter of Intent on the establishment of an India-Australia Strategic Research Fund.	March 2006
12	Arrangement for the Reciprocal Protection of Exchanged Classified Information of Defence Interest	July 2007
13	MoU on Intellectual Property Rights	May 2008
14	Extradition Treaty	June 2008
15	Mutual Legal Assistance Treaty	June 2008
16	Action Plan - Coal between Ministry of Coal and Department of Resources, Energy and Tourism	November 2008
17	Action Plan - New and Renewable Energy between Ministry of New and Renewable Energy and Department of Resources, Energy and Tourism	November 2008
18	Action Plan - Mining and Minerals between Ministry of Mines and Department of Resources, Energy and Tourism	November 2008
19	Action Plan - Power between Ministry of Power and Department of Resources, Energy and Tourism	November 2008
20	Action Plan in Petroleum and Natural Gas Sector between Ministry of Petroleum and Natural Gas and Department of Resources, Energy and Tourism	November 2008
21	MoU on Water Resources Management	November 2009
22	Joint Declaration on Security Co-operation	November 2009
23	MoU on New and Renewable Energy	February 2010

Need for a mechanism to prevent attacks on Indians abroad

Domestically, the Indian government declared that it would formulate a policy to deal with racial discrimination against Indians abroad.

As part of the initiative to create an institutionalised mechanism to prevent racist attacks on Indians abroad, Vayalar Ravi, the head of the overseas Indian affairs ministry, has been tasked to protect the Indians in Australia. Ravi has called for a report on these incidents from the Indian High Commission in Australia.

There was a 46% drop in Indians applying for student visas for Australia from July to 31 Oct 2009 compared to the same period in 2008, and a total drop of 26% in student visa applications to Australia from all countries (including India).