With a high-income population of about 85 million people, according to Pew Research – about three times Australia’s total population – it is seen as a prime target for the education, wine and tourism sectors, all of which have been badly hit by the pandemic and deteriorating relations with China.
Bilateral trade It is expected to nearly double to A$60 billion over the next five years, following an agreement from December 29 that cuts or eliminates tariffs on many goods and services and provides greater recognition of professional qualifications. This is still only a sliver of Australia’s $280 billion two-way trade with China, which India widely recognizes as a huge piece of the country’s diversification puzzle.
Australia’s efforts are paying off, just as its relationship with China is showing signs of thawing. Between April and October this year, India’s imports of Australian goods were 48% higher than a year ago, reaching US$12.3 billion. The mood is upbeat and Ajay Sahai, Director General, Federation of Indian Export Organizations expects further growth in the coming years.
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“Coal, copper, aluminum, cobalt we’re seeing a big jump in all of these. Wine imports will also increase,” Sahai said in an interview, citing potential benefits from the deal.
Australia, where the Indian diaspora represents about 3% of the population, established the Center for Australia-India Relations in 2022 to promote policy dialogue and conduct scholarship and fellowship programs, among other things. India and Australia are part of a multi-year program to help Australian businesses compete in India and will host a leadership dialogue this year, which will be attended by Indian Prime Minister Narendra Modi.
Here are four sectors to benefit from stronger Australia-India ties:
education
When international borders reopened earlier this year, Australia’s higher education sector faced the daunting task of rebuilding the lucrative international student market. The task was recently made more difficult by China’s insistence on pursuing a Covid-zero strategy, meaning mainland students were largely unable to return to Australian campuses.
At the University of Sydney, 2022 marked the highest international enrollment from outside China, vice-chancellor Mark Scott said, with the surge driven by numbers from India. There was growth across all faculties and schools. After a recruiting trip to India in September, he is hopeful of further gains in 2023.
At the end of October, 121,868 Indian students were enrolled in the country, down about 13,300 on 2019. By comparison, enrollments from China are nowhere near their pre-pandemic highs.
Under the new trade deal, universities expect demand from India to increase further, with Indian graduates from select streams qualifying for longer stays in Australia to work, as well as the promise of mutual recognition of educational qualifications.
tourism
Tourism is another sector where Australia is keen to lure India’s growing middle class. Its efforts seem to be working, with the latest data from December showing that India is the second largest source of visitors after New Zealand, replacing China in the top five.
Earlier this year, Tourism Australia organized a trip for a handful of Indian social media influencers to watch the ICC Men’s T20 Cricket World Cup in Melbourne in October. The push was part of a wider, global A$125 million promotion, a spokeswoman for the tourism agency said.
One of the influencers was Barkha Singh, whose video of a popular Bollywood number with Australian food critic and TV presenter Matt Preston received 1.3 million views. Singh’s other posts include a helicopter ride to Rottnest Island, diving in the Great Barrier Reef and an Instagram reel of an India vs Pakistan match.
Still, Indian holidaymakers are not as lucrative for Australian businesses as Chinese visitors because their spending power is still relatively weak compared to China’s.
According to economists at the Australia and New Zealand Banking Group, the tourism sector needs almost twice as many visitors from India to generate the same revenue.
Critical Minerals
India was Australia’s second largest coal export market in 2020-21, according to official data. Australia’s coal trade with India far exceeds other exports in terms of value and is still growing.
But as the world moves away from fossil fuels, Australia shouldn’t rely on its coal trade with India to stay strong, according to Raghavendra Jha, emeritus professor at the Australian National University’s Crawford School of Public Policy.
“Both India and Australia are very sharp and, at the moment, will make unexpected changes in their power mix,” he said.
Still, there are opportunities in the resource sector. Lisa Singh, CEO and deputy chair of the Melbourne-based Australia-India Institute, said Australia has 21 of the 49 minerals identified in India’s critical minerals strategy so there is a “perfect marriage in efforts to decarbonize their economy”. of the Australia-India Council of the Australian Government.
Wine wins
In the 12 months to September 2022, Australia was India’s largest source of liquor, importing A$16.2 million, an 81% gain over the previous year, according to government data.
Its emerging wine market is projected to grow 8% per year through 2024, from a low base, as changing attitudes toward alcohol increase the number of wine drinkers, Austrade said. The bilateral trade agreement will reduce tariffs on Australian wine, giving it a further boost.
The trade agreement is expected to improve access for other Australian sectors, including pharmaceuticals, cosmetics, lentils, lamb and horticulture exporters, Trade Minister Don Farrell said in a statement.
Still, while some improvements are expected, other industries hit by China’s trade woes are expected to miss out.
With a large rural population whose livelihoods depend on farming, Australian agricultural exports such as barley are unlikely to find a home in India, says Patricia Ranald of the University of Sydney.
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