Australia is committed to significantly boosting business ties with India even as the two governments continue their decade-old discussions on a proposed free trade agreement, Catherine Gallagher, Senior Trade and Investment Commissioner and General Manager - South Asia at the Australian Trade and Investment Commission (Austrade) told Moneycontrol in an exclusive interview.
The 'Australia-India Business Exchange' (AIBX), launched to handhold Australian investors in the Indian market, aims to quickly expand the footprint of Australian investments in India, beginning with premium processed foods, healthcare and industrial services markets, Gallagher said.
She also shared details of the host of bilateral sectoral engagements planned in 2021, as part of the Comprehensive Strategic Partnership signed between both nations in December 2020.
The Australian government's 'Indian Economic Strategy 2035' envisions significantly raising trade and investment with India, and remove dependence on China. Would the strategy hold up even in the absence of the proposed bilateral trade agreement that has now been discussed between both countries for 10 years, but currently remains without a deadline?
Yes, absolutely. The comprehensive strategic partnership (CSP) committed both our countries to working more closely on a host of issues, and as part of that we did agree to reengage on the Comprehensive Economic Cooperation Agreement (CECA). So, the intention is to work together to reinvigorate that discussion. We know these things take a lot of time, and we really do want to have a high-quality FTA with India and the intention is still there. So, the intention is definitely there.
Continuing on that road, the CSP has demonstrated our long-term commitment to work together in so many areas -- economic, diplomatic, geopolitical. We have signed a number of MoUs under the CSP, which will demonstrate our commitment to the economic relationship. However, the strategy was commissioned back in 2017, and even at that point, we were committed to expanding and acknowledging our important relationship with India, even before any of the current global trade tensions began.
With greater bilateral dialogue now planned under the Comprehensive Strategic Partnership, what are some of the government-to-government engagements planned for this year?
The CSP has talked about the need to enhance the government-too-government regular engagement. Our two countries’ agriculture ministers had a meeting last week where they discussed opportunities to work even more closely together, particularly on the trade side. There was quite a bit of discussion on the grains partnership, another priority sector for bilateral cooperation.
Also, under the CSP, Australia and India agreed to boost cooperation on technical policy, commercial cooperation and water management. We've already held one meet on the Australia-India water dialogue where we looked at the dam safety management partnerships. The next one is going to be on June 30, focused on water sensitive urban design.
In July, there will be another round of government to government and industry to industry engagement on critical minerals under the umbrella of the CSP. We've also got a piece on the circular economy dialogue in August. We've also got an Australian healthcare Advisory Council being convened in coming weeks.
How will AIBX operate? Will it also act as a trade and industry body or just be restricted to helping businesses start operating at the ground level?
There is a real depth of understanding about the need for both countries to work much more closely. Multiple reports have identified the real impediment as the lack of awareness among both sides about the two economies. That's what AIBX is all about. It's about actually getting to the nuts and bolts of how we can increase awareness of the markets across both business communities.
So, in the first instance, our intention is to work on a sector-by-sector basis. The AIBX platform has detailed information about various sectors. Within those sectors, the aim is to work in areas which companies want to explore. At the moment, we've been working with the Australian industry group to identify what are the gaps in literacy for Australian businesses when it comes to India. We will be working with industry partners like CII or perhaps FICCI to find out what their members need from the Australian side.
So more than moving into this area of lobbying, it will be grassroot and work in filling this gap. We've taken a big leap in filling that gap already by commissioning a number of detailed sectoral reports. We've just put up our e-commerce report and the critical minerals demand report will be launched in the coming weeks, followed by others.
Which are the sectors you are focusing on, as of now?
I think that for Australian business, there are two, very distinct streams and opportunities within the Indian market. The first one of course, is the opportunity posed by the demand in India for Australia's premium, processed food products because we have a high reputation for clean and sustainable goods, and that's really resonating in the market. We've also seen ITC limited acquire the Indian unit of Australia-based agribiotech company Technico PTy. Last year, we had about 10 companies that we were assisting on e-commerce platforms. Now, we've got about 40 companies that we're directly helping. Health, and wellness products such as nutraceuticals are also doing incredibly well in that place.
The other side of the market is the opportunities that the government reform agenda is providing to Australian companies. We are known for our high-quality services, technology and knowledge economy. And this is where we're seeing a lot of scope, specifically in infrastructure, also mining and resources.
Will AIBX be accepting interested companies on a continuing basis or will it focus on a select number of firms every year?
We want the program to be as flexible and as useful for business as they possibly can. So, it's not so much about bringing companies into the program and graduating them through, as much as it is about looking at the needs of businesses on both sides and supporting companies in specific sub sectors. Build their knowledge and capability to engage in the other market and try to support commercial success.
For example, in the critical minerals sector, we're now trying to develop a knowledge base that will inform Australian and Indian business in that sector, about where the specific opportunities are for bilateral cooperation, whether it's commercial, or research. And then to bring the companies in that sector together. If an industry group wants us to be the facilitator or roundtables or web meets or even trade delegations in the future, then that's where we'll jump in. But we want to first listen to the industries and understand which industries and sub sectors are ready to engage more.
For Australian companies interested in entering the Indian market, what seems to be some of the main barriers to entry?
The issue is the misperception that India is still the India of 20 years ago. Australian companies aren't as aware of the progress of that change in reforms, and the speed at which India is moving up in ease of doing business. We also did a survey of Australian businesses to see what they wanted to help them come to India. They saw navigating regulation and getting up to date insights as issues. I think there were some comments around Intellectual Protection, and also, connecting with the right partners.
Clearly the feedback we've had from industry is, is that even when there aren't specific barriers to market entry, challenges remain on understanding how to enter the market. This includes lack of knowledge in figuring out partnership strategies and understanding what support foreign investors or importers can access in the market.
Conversely, what are the sectors that Indian companies looking to invest in Australia can easily access?
Indian companies are making a really significant contribution to the Australian economy. We've got some quite significant investment from India into Australia in recent years with the bulk of that investment being particularly in the technology sector. A number of India's technology firms like Wipro and Infosys have significant operations in Australia and have created substantial employment in Australia. Also, as we understand it, you know, those Australian operations are also supporting their growth here in India. One of the new areas where we've seen interest is hydrogen investment.
Indian companies have till now invested significantly in mineral extraction in Australia. Do you expect that to continue?
With regards to critical minerals, both countries recognize that there is a lot more than we can do together to build commercial research and technical partnerships. And certainly, there is also an opportunity for Indian companies to look at investment in critical minerals projects in Australia. We have quite a significant number of projects that are either in early stage development or greenfield and we've had some discussions with Indian companies in recent times.
There's also opportunity for Indian companies in mineral processing in Australia, and potentially offtake agreements for Australian supply of critical minerals into India which compliment India's own agenda for renewables for development of electric mobility and those sorts of downstream industries.